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EDA Agenda 10-8-2008AGENDA CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, October 8, 2008 - 6:00 p.m. Mississippi Room - 505 Walnut Street, Monticello, MN Commissioners:President Bill Demeules, Vice President Dan Frie, Treasurer Bill Tapper, Bill Fair, Bob Viering, and Council members Clint Herbst and Wayne Mayer. Staff EDA Executive Director Megan Barnett 1. Call to Order. 2a. Approve Minutes: May 14, 2008 2b. Approve Minutes: August 13, 2008 3. Approval of the EDA Invoices. a. Invoice from Lamar for billboard sign 4. Public Hearing for the EDA Business Subsidy Criteria (TIF) and approve amendments. 5. Public Hearing for the EDA Business Subsidy Criteria (GMEF) and to approve amendments. 6. Update and Expansion of TIF Management Plan 7. TIF District and Project Record Management 8. Approve Billboard Message 9. Report of committees: Higher Education Committee, Marketing, Housing, Fiber Optics 10. Report of the Executive Director. a. Review of preliminary work outline b. IEDC Update c. Business Retention d. Business Initiative e. 413 W. 4th Street f. Informational handouts g. Future Agenda items 11. Adjournment. MINUTES CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, May 21, 2008 1. Call to Order. Chairman Demeules called the meeting to order and declared a quorum of the EDA. 2. Roll Call. On roll call, the following Commissioners were present: President Bill Demueles Vice President Dan Frie Treasurer Bill Tapper Commissioner Wayne Mayer Commissioner Bob Viering Commissioner Bill Fair Commissioner Clint Herbst Also present were Executive Director Ollie Koropchak and Treasurer Tom Kelly. Commissioner Frie asked that staff review a foreclosed property for possible purchase for redevelopment. Frie stated that on that order, he had invited a listing agent to discuss this topic. He stated that he would like to move that item to head of agenda. Commissioner Tapper added under old business a clarification of the role of the EDA versus the IEDC. 3. Reading and approval of the Apri19, 2008 City of Monticello EDA Workshop and Annual Meeting Minutes. MOTION BY COMMISSIONER FAIlt TO APPROVE THE MINUTES OF APRIL 9, 2008 FOR THE CITY OF MONTICELLO EDA WORKSHOP. MOTION SECONDED BY COMMISSIONER VIERING. MOTION CARRIED, 7-0. Commissioner Herbst abstained from the vote. Regarding the Annual Meeting Minutes, Commissioner Tapper noted the spelling correction of "Front Porch" and "Motion" on page 11 of the minutes. MOTION BY COMMISSIONER TAPPER TO APPROVE THE MINUTES OF THE ANNUAL EDA MEETING. MOTION SECONDED BY COMMISSIONER VIERING. MOTION CARRIED, 7-0. EDA Minutes - 05/21/08 4. Approval of the EDA Bills and Communications. Commissioner Mayer inquired whether the property tax statement for Cedar Street Garden Center parcel had been reclassified back to vacant. Koropchak stated that it would not be reclassified for this year, but would be noted as vacant for the following year. Koropchak also added an invoice from Veit Companies in the amount of $35.50 for a solid waste fee associated with the demolition of the Cedar street Garden Center. She stated that .she is recommending approval of the invoices as shown, but is asking Bret Weiss of WSB to attend to discuss items related to invoicing, work done and to be completed at Otter Creek. Viering inquired about why Kennedy & Graven got involved in an accounting issue. Koropchak clarified that it had to do with previous and future expenditures as related to TIF legalities. Demeueles inquired about the reason for a separate invoice from Veit, as the demolition was to be all-inclusive. Koropchak stated that she believed it was a permit fee. Koropchak stated that the balance most likely had to do with the tank removal. Koropchak stated that she would provide further clarification. MOTION BY BF TO TABLE UNTIL CLARIFICATION PROVIDED ON THE VETT INVOICE. VIERING inquired about the project coordination portion of WSB's billings. Herbst noted that he had spoken with the State Auditor about this issue. Herbst stated that he does think it is appropriate that WSB provide further clarification. Tapper asked if Kelly had been able to ascertain what the budget for this project was. Frie noted that a summary of billings to date had been. provided at the bottom of WSB's billings. Tapper asked Kelly for his opinion. MOTION BY COMMISSIONER VIERING TO APPROVE KENNEDY AND GRAVEN AND EHLERS AND PROPERTY TAX INVOICES AND TO TABLE ACTION ON VEIT AND WSB INVOICES. MOTION SECONDED BY TAPPER. Tapper stated that he is totally amazed at the amount of time spent by Kennedy & Graven on that topic. Mayer stated that even though WSB has akeady categorized these as labor expenses, this body wants that body to be further itemized. Viering sought clarification on project management. MOTION CARRIED, 7-0. 5. Reports of the Executive Director. No questions on the report of the Executive Director. • EDA Minutes - 05/21/08 8. New Business. E. Added Item: 413 W. 4~' Street Pro e P rt3' Wally Coudron, representing Edina Realty, addressed the EDA regazding the matter of the foreclosed property at 413 W. 4`s Street. The property is currently listed at $55,000. It is a bank foreclosure property. Current estimated tax value is approximately $116,000. Coudron reviewed background data on the house, including past sales. Commissioner Frie stated that this information was being presented based on information from City staff, this is due to history of illegal activity and the state of the property. City Administrator O'Neill had noted it as a possible redevelopment property. It may be combined with other parcels for a project. Herbst inquired about surrounding properties. The property to the west is also in poor condition. Herbst noted that the price was reasonable and suggested that the resale of vacant property would be a good idea. Fair commented that with Habitat for Humanity now in Monticello, this may be a case where the property could be sold to Habitat and they could do a project on the parcel. Fair noted that a legal opinion on whether that could be done would be needed. Frie stated that the EDA would be primarily interested in the land. Koropchak stated that a site visit would be a good idea, and then the EDA would need to consider where funds for purchase and demolition would come from. Fair inquired whether an option on the property could be made to research that information. Coudron stated that banks do not add contingencies on foreclosure properties. Tapper inquired whether there were any known issues with the property. Coudron stated that the bank is selling the property as is and the bank has not noted anything beyond trash removal. Koropchak stated that funds would most likely come from an old redevelopment district and staff would need to confirm that those funds are available. The Commissioners discussed the merits of moving forward or waiting for staff to provide answers on funding sources. Mayer commented that a counter offer should be made. Mayer inquired whether Edina would be listing and selling agent. Coudron confirmed it would be a dual representation. MOTION BY COMMISSIONER FRIE TO DIRECT STAFF WORK WITH KOROPCHAK TO OFFER THE SELLER $46,000, WITH EARNEST MONEY NOT TO EXCEED $2,500, WITH INCREMENTAL OFFERS NOT TO EXCEED A FINAL OFFER OF $52,000, SUBJECT TO UNRESTRICTED FUNDING. • 3 EDA Minutes - 05/21/08 MOTION SECONDED BY COMMISSIONER MAYER. MOTION CARRIED, 7-0. 6. Report of Committees. A. Marketing: Frie reported that the Marketing Committee had renewed a contract for the billboard in order to maintain continuous visibility. A presentation by commercial brokers was also discussed for an upcoming meeting. Herbst inquired whether the City could advertise on the billboards it owns, rather than renting. Koropchak stated that the Marketing Committee did research the EDA-owned billboard. The EDA does own the land and the space is leased for the year. When they come up, the Marketing Committee could look at them at that time. B. Fiber Optics Committee: Mayer reported that bonds are currently being sold. Herbst noted that TDS is putting out information on their own fiber loop. Herbst stated that TDS is now stating that they are going to place their own system. Herbst noted that he and Mayer had met with them some months ago and that was not their plan at that time. C. Housing: Viering stated that he had met with Central MN Housing Partnership and he will be putting together a meeting regarding possible grant opportunities. Greater MN Housing Fund maybe another option. Fire noted that options for grant funds are available; it will be a matter of meeting the grant criteria. Educational component will be important to grant funding. 7. Unfinished Business. A. Consideration to review the amendments to the EDA Business Subsidy Criteria (TIF) and to call for a public hearing date to approve amendments. Koropchak reported that a revised version of the subsidy criteria was included in the agenda packet. The recommend revisions are included in this draft. As noted, the GMEF and TIF criteria had been separated. These criteria do not need to be approved by the City Council MOTION BY COMMISSIONER HERBST TO APPROVE THE PROPOSED BUSINESS SUBSIDY CRITERA. MOTION SECONDED BY COMMISSIONER TAPPER. Koropchak clarified that a public hearing would actually be needed prior to approving the criteria. COMMISSIONER HERBST AMENDED HIS MOTION TO CALL FOR A PUBLIC HEARING FOR THE REGUALR AUGUST MEETING OF THE EDA. a ~ EDA Minutes - 05/21 /08 AMENDED MOTION SECONDED BY COMMISSIONER TAPPER. MOTION CARRIED, 7-0. B. Consideration to review the amendments to the EDA Business Subsidy Criteria (GME~ requesting City Council approval and to call for a public hearing date to approve amendments. Koropchak explained that the recommended amendments had been made. The criteria would need to go to the Council and then come back to the EDA for a public hearing. MOTION BY COMMISSIONER FAIR TO REQUEST THE CITY COUNCIL REVIEW THE PROPOSED AMENDMENTS TO THE GMEF GUIDELINES IN JULY AND TO CALL FOR A PUBLIC HEARING AT THE REGULAR AUGUST MEETING OF THE EDA. MOTION SECONDED BY COMMISSIONER HERBST. MOTION CARRIED, 7-0. C. Consideration to review Preliminary Development Agreements and Private Contract for understanding of definition of Administrative Costs and review application fees/deposits of other cities. Koropchak stated that Kelly had provided information regarding fees and deposits charged by other communities, as well as information from the financial and legal firms used by the City. Koropchak clarified that administrative costs often refer to inspections for TIF, staff consultation, and environmental inspections. Tapper noted that there seem to be many unpredictable items related to the establishment of these projects. Tapper suggested that at the initiation of each project, the client be provided with an estimate of the costs for these projects, with a 25% addition for the "unknowns". Tapper stated that therefore, the EDA would. ask for 30% of the estimated total cost. The balance, or actual costs above that amount, would be paid on the last bank draw, so that it becomes part of the financing for the project. The EDA would also provide a monthly statement on administrative costs. Herbst commented that it is nice to have someone who has been involved in these projects provide the recommendation. Mayer inquired about what happens if the consultant costs come in over the additional 25%. Tapper stated that the client is still responsible for that amount, but the 25% at least provides opportunity for that overage. Mayer stated that the client then still needs to understand that there maybe costs over and above these deposits. • EDA Minutes - 05/21/08 Fair stated that his concern is that we might be adding additional administrative costs by adding the monthly statements. The current process may need additional clarification. The • Commissioners discussed the merits of further enhancements to the agreement and the timing of consultant involvement. Mayer inquired whether it is the consultants who are not timely with their billings. Kelly reviewed the billing cycle. Koropchak noted that 10% of the TIF can be used for administrative according to the State statutes. Demeules noted that many cities do not require a deposit. Fair noted that they are billed for the costs. Frie asked if there could be a $10,000 deposit with a $20,000 ceiling, and any overage would be paid back through the 10%. Koropchak stated that she has added some of the late items, after the final payment, to the admire costs of the TIF district. Frie clarified that administrative costs include consultant time. To date, the City has not charged for staff time on projects, but those costs could be included. The commissioners recognized that better up-front communication is the goal of this entire process. Fair recommended reviewing two past projects in terms of administrative fees in order to determine how well Tapper's proposal fits. MOTION BY COMMISSIONER VIERING TO INCORPORATE COMMISSIONER TAPPER'S RECOMMENDATIONS INTO THE DEVELOPMENT AGREEMENT PROCESS. Fair noted that he had a number of questions related to the terminology presented in the proposal. Fair and Viering discussed the merits of the proposal in terms of timing related to bank closing. Fair recommended having the City's consultants review the proposal in order to look out for the City's best interests. Viering stated that he had concerns about spending funds to have consultants review the document when the proposal seemed very simple. Koropchak inquired how the statement indicating that final payment would be made at the last bank draw would be different than finagling the payment at the time of Certificate of Completion for these projects, which is required for economic districts. Tapper clarified that the last draw marks the time from temporary financing to permanent financing, and is bundled by a title company. Tapper stated that his goal is to indicate to the 6 EDA Minutes - 05/21/08 developer that this payment should be part of his last draw. Once those funds are gone, it is difficult to find a funding source. Fair noted that currently, the funding is due at the time of the City's Certificate of Occupancy versus a private arrangement between a bank and their client. Frie inquired about how other cities use the 10% TIF administrative costs. Kelly responded that the use is somewhat restrictive and needs to be documented very well. A lot of communities track staff and consultant time and charge against the 10%. However, he indicated that it is not 10% of the increment, but 10% of the expenditure each year. Koropchak stated that she tracks very clearly the consultant time for each project. This is also true for infrastructure and land acquisition purchases. Koropchak stated that although the timing maybe different between last draw and certificate of closing, she does believe that the estimate would be helpful. Koropchak suggested that last bank draw item should be reviewed by EDA legal counsel. Viering suggested that the agreement is fine as it reads; this information would be placed in a separate letter. Mayer clarified that this would replace the deposit information in the current pre-development agreement. Mayer inquired about the costs of providing monthly statements. Kelly stated it would be more of a workload issue than a financial cost issue to the City. It will be a matter of setting up a procedure. Kelly stated that if there is money due, they should be paying for overages 30 days from date of monthly invoice. Kelly also stated that only requiring 30% of deposits may be a problem. He suggested that requiring a deposit at 100% of the estimated costs might be more practical. Herbst stated that he agrees that the EDA should take a look at this proposal, but believes that staff should have an opportunity to review and provide recommendations on this. He asked Kelly if with technology, they couldn't just access their account at City Hall with a password. VEIRING AMENDED HIS MOTION TO REFER THE PRESENTED PROPOSAL TO CITY STAFF FOR REVIEW AND RECOMMENDATION. AMENDED MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 7- 0. 8. New Business. A. Added Item: Role of the EDA versus IEDC. Commissioner Tapper stated that the two groups have been reviewing their purpose for some time, but he suggested that looking at both from a broad perspective in order to determine clear purpose for both so that they can work in concert. • EDA Minutes - 05/21/08 He stated that the EDA has been an organization that deals with the here and now. They are the facilitators, banks, etc. They have economic muscle and provide funds for economic development. The IDC has historically been the group that has looked to the future and work with the City to achieve those goals, whether it is acquisition of land or business recruitment. The group has no economic. muscle, but rather to act to promote growth. Mayer noted that this information really resulted from discussions originating with the IDC. Tapper confirmed and stated that he is not seeking any action, just to develop a better understanding of the two roles. Fair noted that the EDA has statutory authority. He indicated that the Council should also have some say in the roles and purpose of the two organizations. Koropchak explained that the Council is being asked to approve a resolution that recognizes the IEDC as a commission of the City and includes a new mission and vision statement. It noted the IEDC's roles as a promoter of business as a whole for the community. Koropchak noted that both groups have work plans and separate responsibilities. Fair asked what powers are being granted by the City Council to this group. Then that information can be broughtback to the EDA for information. Koropchak noted that the resolution includes information on accountability to the Council. That information will be brought back to the EDA. Tapper commented that the IDC had been an independent organization for quite some time. Fair noted that he remembers that in the past, it had been advisory, but had no powers. If Council is going to officially recognize it, powers will go with the recognition. Tapper stated that Council has done that, but that the IDC is now recommending a revision that is more inclusive of development to include things such as bio-science technologies and businesses which support overall economic development. This is consistent with the Comprehensive Plan. Fair clarified that in order to know what the EDA's relationship with the group is, the powers of this group need to be clarified. Tapper noted that the information presented just serves to clarify the two separate purposes of the two groups. The Council can determine how responsibilities will be divided. Fair noted that the direction must come from the Council. a ~ EDA Minutes - 05/21/08 Koropchak stated that the EDA will have a clearer picture once they have the opportunity to review the IEDC's work plan. She noted that the IEDC does not have any statutory authority. Herbst agreed that Council will review this information. It is helpful to understand both so that the City understands there is not duplication. B. Consideration to approve a Certificate of Completion (Minimum Improvements) for Vine Place (Front Porch). Mayer inquired what repercussions there will be for allowing rental versus owner- occupied. Koropchak responded that only the first 18 townhomes were required to be owner-occupied. The recommendation of the attorney was that all the homes are completed, of the last 8, two are being rented. Given the current housing situation, the attorney recommended that the City allow this to proceed with reporting on status of purchase of the homes. With the City's rental ordinance, these units must be licensed. Herbst stated that this portion of the contract states that all must be owner-occupied. Koropchak noted that there is a discrepancy in the contract. Herbst noted his concern about areas converting to rental units. Herbst stated that he preferred that the EDA be consistent and require that they be owner occupied, especially given the amount of assistance. Mayer echoed that concern. Fair noted that once the City has completed the contract obligations, they will be able to rent in any case. Mayer inquired what the repercussions of action would be. Koropchak reviewed the financing and contracts for TIF reimbursements. Fair stated that he disagreed. If the certificates of completion have been given and was issued the rental licenses, then perhaps the City should consider this request. He has made the minimum improvements under the contract. The final outcome is that he has met his obligations. Mayer commented that renting is a violation of the contract. MOTION BY COMMISSIONER FAIR TO APPROVE THE CERTIFICATION OF COMPLETION (MIlVIlvIiJM IMPROVMENTS) FOR THE FRONT PORCH PROJECT AND PRESERVING ITS RIGHT BY WAIVING THE CONTRACT REQUESTING DEVELOPER WITHIN THREE YEARS PROVIDE DOCUMETNATION AS TO THE STATUS OF LEASE/PURCHASE OF THE TWO RETNAL TOWNHOUSES AND SUBJECT TO ANNUAL COMPLAINCE OF THE CITY RETNAL ORDINANCE. MOTION SECONDED BY COMMISSIONER FRIE. • 9 EDA Minutes - 05/21/08 Commissioner Frie stated that this was perhaps a cased of missed opportunity, where that condition should have been included with the planning approvals and with the covenants for the project. He indicated that he sees no purpose served by punishing the developer at this point, given the improvements that have been made to the area. Fair noted that project would not have developed without TIF assistance. MOTION CARRIED 4-3, WITH COMMISSIONERS HERBST, MAYER AND VIERING IN DISSENT. C. Consideration of a motion acknowledging submission of Declaration of Potential Conflict of Interest. MOTION BY COMMISSIONER HERBST ACKNOWLEDGING THE SUBMISSION OF A DECLARATION OF POTENTIAL CONFLICT OF INTEREST FROM EDA COMMISSIONER WILLIAM TAPPER HEREBY ENTERING INTO THE EDA MINUTES OF MAY 21, 2008. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 7-0. D. Consideration to approve the request for an extension of the balloon payment date for GMEF Loan No. 021(Tapper's Inc.) Commissioner Tapper excused himself from the meeting. Koropchak explained that the developer is asking for an extension of a balloon payment and has provided the terms of guideline for deferment of payment. Developer is asking for deferment from May 1$`, 2008 to May lst, 2009/. Loan payments are current. MOTION BY COMMISSIONER FRIE TO APPROVE EXTENDING THE BALOON PAYMENT DATE FOR GMEF LOAN No. 021 FOR TAPPER' S INC. FROM MAY 1, 2008 TO MAY 1, 2009. MOTION SECONDED BY COMMISSIONER HERBST. MOTION CARRIED, 7-0. E. Other. Koropchak thanked the Commission for the opportunity to work with them. Koropchak commented that she would encourage that the EDA research its ability set up special taxing districts. 9. Adjournment. 10 EDA Minutes - 05/21/08 MOTION BY COMMISSIONER FAIR TO SUSPEND THE REGULAR JUNE MEETING UNTIL A NEW ECONOMIC DEVELOPMENT DIRECTOR IS HIRED. MOTION SECONDED BY VEIlZING. MOTION CARRIED, 7-0. MOTION BY COMMISSIONER FRIE TO ADJOURN. MOTION SECONDED BY HERBST. MOTION CARRIED, 7-0. 11 MINUTES CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, August 13, 2008 6:OOpm 1. Call to order Chairman Demeueles called the meeting to order and declared a quorum. 2. Roll Call On roll call, the following Commissioners were present: Chair Bill Demeutes Treasurer Bill Tapper Commissioner Bob Viering City Council Mayer Vice President Dan Frie Absent: Commissioner Fair and Mayor Herbst Also present Executive Director Megan Barnett, Administrator Jeff O'Neill, and Finance Director Tom Kelly. 3. Introduction of Executive Director Administrator O'Neill introduced Executive Director Megan Barnett. Ms. Barnett provided a brief explanation of her professional history. 4. Report of Committees: Marketing The marketing committee did not meet • Fiber Optics "~ Commissioner Ma er stated he is receivin feedback from the communit re ardin Y g Y g g incorrect information about the potential fiber optic project. Discussion occurred regarding easement logistics for the anticipated fiber optic line. Council member Mayer discussed the fiber loop project, he stated the loop will have Internet capability. It is anticipated that cable and TV will be added at a later date. Higher Education Administrator O'Neill stated the Higher Education Commission is working on developing a plan for a pilot program to inventory training needs for existing businesses in Monticello. The Committee is further researching venues in order to meet the established training needs. O'Neill stated that the committees will most likely approach various jurisdictions and private investors in order to fund the program. 5. New Business: TIF Reports Finance Director Tom Kelly stated that the Cit was successful in com I in with re ulator Y PY g g Y requirements related to publishing and reporting TIF districts. Discussion ensued around the current standings of the districts. Finance Director Kelly stated that there were no red flags at this time, however the EDA and Executive Director may want to look at decertifying some of the districts to get them back on the tax payrolls. Ms. Barnett stated she would put together a summary of all the TIF districts to include the following information: the TIF districts are overall financially status, what districts are ready to sunset, and if there are any available funds within the districts. Kelly stated that the Downtown District looks to sunset in the year 2024. Further analysis may want to be completed to determine if this date could impede future redevelopment efforts. Sale of property located at 300 4th Street E Administrator O'Neill stated he was approached by George Larson, who owns the property located at 300 4th Street E ,regarding the potential for the City to purchase his property. O'Neill provided the EDA with detailed information about the existing under utilized condition of the property and the asking sale price. Commissioner Mayer asked O'Neill what the benefit would be in purchasing Mr. Larson's property. O'Neill stated this property is a key piece to further redevelopment within the immediate area. O'Neill stated this could be an opportunity the City may not have in the future if the EDA wants to develop this property in the future. The EDA questioned where funding sources could be utilized for the .purchase of this property and future purchases of underutilized properties. The consensus of the authority was there needed to be a plan in place instead of a "shot gun" approach. The EDA stated they are interested in obtaining an inventory of City owned property and identify properties within the downtown area that may need to be redeveloped in the future. The EDA stated they would like to make a priority list of potential properties to purchase. The EDA directed Staff to: inventory property within the City and make a list of potential redevelopment areas and research current and potential funding sources. The EDA and Staff will then work together to establish a priority for purchasing said properties. 6. Adjournment COMMISSIONER FRIE MOTIONED TO ADJOURN MOTION SECONDED BY COMMISSION MAYER. MOTIONED CARRIED 5-0 President Executive Director • 3. Approval of the EDA Invoices. A. Lamar Attached is the invoice for the monthly charge pertaining to the billboard. The monthly contract amount is $1,100. The EDA is being asked to approve the attached invoice. • ~J LAMAR 2050 VERTISER: CITY OF MONTICELLO SIGN: ONTRACT N0: LAMAR ID NO: 308655 -- N~®'~jE P.O. BOX 98030, HATON ROU4E, LA 70896 OR 225.928•t000 oVV-/II-YOJO INV NO: 11649863 ACCOUNT NO: 305703 ODO INVOICE DATE: 9/20/2008 BILLING PERIOD: 9/20/2008 TO 10/19/2008 157-DSL6867 • • •, • MONTICELLO, MN 9/20/2008 TO 10/19/2008 I-94 3000' E/O HWY 25 SS F/E 20083 ILL 1,110.00 v a EP 2 6 2408 ~~~~~~~~.L~. ~1~ ~~ CO f AMOUNT ST. CLOUD,MN 1,110.00 PLEASE SEE REVERSE FO R IMPORTANT 1NP bRMATIONi VISA ^ Credit Card Information: Name as it appears on your credit card: Account ~ CTTY OF MONTICELLO BIII to Address as it appears on your credit card bill: Expiration Date: 157-DSL6867 Signature: By atgning this you agree to eN terms of our carHract. 02051 007 I~itl~tl~l~~tll~~lit~t~l~ll~~l~lttltttilttttlllltittltittlttil CITY OF MONTICELLO 505 Walnut St Ste 1 Monticello, MN 55362-8831 MASTERCARD ^ AMERICAN EXPRESS ^ Date: THIS AMOUNT DUE TERMS: 1573DS7D3oooo NET 30 QAYS 0011649863000111000 1 110.00 REMITTANCE STUB: . MAIL THE LAMAR COMPANIES PAGE 1 PAYMENT • P•0. BOX 96030 TO BATON ROUGE, LA 70886 checwM neyOrge Cl1o/ao/zoos • EDA 10.8.08 4. Public Hearing and approval to amend EDA Business Subsidy Criteria (Tax Increment FinancinEl Guidelines. A. REFERENCE AND BACKGROUND: The Economic Development Authority (EDA) will need to open the public hearing. The Economic Development Authority (EDA) recently revised .the Business Subsidy Criteria (TIF). The amendments are minor and largely relate to changing references from HRA to EDA, due to the recent combining of the two authorities. B. ALTERNATIVE ACTION: 1. Motion to close the public hearing. 2. Motion to approve the amended Business Subsidy Criteria (TIF) Guidelines. 3. Motion to table any action on the amended Business Subsidy Criteria (TIF). • C. STAFF RECOMMENDATION: City Staff recommends approving the amended Business Subsidy Criteria (TIF). D. SUPPORTING DATA: The proposed amended Business Subsidy Criteria is attached (TIF). • 1 EDA - TIF Business Subsidy Criteria M011'tICELLO CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Business Subsidy Criteria Public Hearing and Adoption the 8th of Se~tember 1999 Public Haring and Adoption of Amendments the 4t day of October 2000 Public Hearing and Adoption of Amendments the 5th of May 2004 Public Hearing and Adoption of Amendments the 3rd day of May 2006 Public Hearing and Adoption the day of 2008 1. PURPOSE 1:01 The purpose of this document is to establish the City of Monticello Economic Development Authority's (hereinafter referred to as EDA) criteria for granting of business subsidies, as defined in Minnesota Statutes 116J.993, Subdivision 3, for private development. This criteria shall be used as a guide in processing and reviewing applications requesting business subsidies. 1:02 The criteria set forth in this document are guidelines only. The EDA reserves the right in its discretion to approve business subsidies that vary from the criteria stated herein if the EDA determines that the subsidy nevertheless serves a public purpose. The EDA. will file evidence of any deviation from these criteria with the Department of Trade and Economic Development in accordance with Minnesota Statutes, section 116J.994, Subd. Z. 1:03 The EDA may amend the business subsidy criteria at any time. Amendments to these criteria are subject to public hearing requirements pursuant to Minnesota Statutes, Sections 116J.993 through 116J.994. 2. STATUTORY LIMITATIONS 2:01 In accordance with the Business Subsidy Criteria, Business Subsidy requests must comply with applicable State Statutes. The EDA's ability to grant business subsidies is governed by the limitations established in Minnesota Statutes 116J.993 through 116J.994. i 3. PUBLIC POLICY REQUIREMENT EDA - TIF Business Subsidy Criteria 3:01 All business subsidies must meet a public purpose in addition to increasing the tax base. Job retention may only be used as a public purpose in cases where job loss is specific, imminent and demonstrable. 4. BUSINESS SUBSIDY APPROVAL CRITERIA 4:01 All new projects approved by the EDA should meet the following minimum approval criteria. However, it should not be presumed that a project meeting these criteria will automatically be approved. Meeting these criteria creates no contractual right on the part of any potential developer or the EDA. 4:02 The project must be in accord with the Comprehensive Plan and Zoning Ordinance, or required changes to the plan and ordinances must be under active consideration by the City at the time of approval. 4:03 Business subsidies will not be provided to projects that have the financial feasibility to proceed without the benefit of the subsidy. In effect, business subsidies will not be provided solely to broaden a developer's profit margins on a project. 4:04 Prior to approval of a business subsidies financing plan and when deemed appropriate by the. EDA, the developer shall provide any required market and financial feasibility studies, appraisals, soil boring, information provided to private lenders for the project, and other information or data as requested. 4:05 A recipient of a business subsidy must make a commitment to continue operations at the site where the subsidy is used for at least five years after the benefit date. 4:06 The EDA may determine after a public hearing that job creation or retention is not a goal of the subsidy. In those cases, the recipient must instead meet at least one of the following minimum requirements (in addition to all other criteria in this document other than those relating to jobs and minimum wages): A. The proposed subsidy must accomplish removal, rehabilitation or redevelopment of "blighted areas" as defined in Minnesota Statutes, Section 469.002, Subd.l 1, or must constitute a cost of correcting conditions that allow designation of redevelopment districts under Minnesota Statutes, Sections 469.174 to 469.179; or B. The proposed subsidy must result in improvements to public infrastructure or public facilities, including without limitations, sewers, storm sewers, streets, parks, recreational facilities, and other City facilities; or C. T'he proposed subsidy must remove physical impediments to development of land, including without limitations poor soils, bedrock conditions, steep slopes, or similar geotechnical problems. 4:07 For any business subsidy that does not meet the requirements of section 4:07, the recipient must create or retain jobs as determined by the EDA and must meet the minimum wage thresholds, described in Section 5:03 C or D Tax Increment Project Evaluation Criteria, and 2 EDA - TIF Business Subsidy Criteria Section 6:03 Greater Monticello Enterprise Fund Guidelines, 1.(b) (whether or not the source of the subsidy is tax increment financing). TAX INCREMENT PROJECT EVALUATION CRITERIA 5:01 The EDA will utilize Tax Increment financing to support the community's long-term economic, redevelopment, and housing goals. 5:02 Each Tax Increment Financing Application will be analyzed and evaluated by the EDA. Each project shall be measured against the general criteria in Sections 1 through 6 and the specific criteria in this Section 5 applicable to tax increment financing business subsidies. 5:03 The EDA. shall use the following guidelines when evaluating a tax. increment financing request. A. All business subsidy requests shall meet the "but for" test. The "but for" test means that the project would not develop solely on private investment in the reasonable future. The developer shall provide findings for the "but for" test. B. Business subsidy request should create the highest feasible number of jobs on site from date of occupancy where deemed appropriate. C. For manufacturing and warehousing business subsidy requests, at least 90% of the jobs created must pay a wage of the higher of $9.00 per hour, or at least 160% of the federal minimum wage requirements for individuals over the age of 20 during the term of the assistance. In the case of a recipient with existing jobs, the EDA may determine that the wage goal is satisfied if wages are increased to at least the minimum specified in this paragraph. Annual written reports are required until termination date. Failure to meet the job and wage level goals require partial or full repayment of the assistance with interest. D. For other business subsidy requests, jobs created must meet as a minimum the federal minimum wage requirement. In the case of a recipient with existing jobs, the EDA may determine that the wage goal is satisfied if wages are increased by a specified amount over the federal minimum wage. Annual written reports are required until termination date. Failure to meet the job and wage level goals require partial or full repayment of the assistance with interest. E. Business subsidy requests should create the highest possible ratio of property taxes paid before and after redevelopment. F. Business subsidy requests should facilitate redevelopment or elimination of "substandard" or "blighted" areas where deemed appropriate. G. Business subsidy requests should facilitate the "clean-up" of environmentally unsound property where deemed appropriate. H. Business subsidy requests should increase moderate priced housing options for area residents where deemed appropriate. 3 EDA - TIF Business Subsidy Criteria I. Business subsidy requests should be deemed to promote additional desired "spin-off' development. Business subsidy requests should demonstrate "community involvement" including demonstrated degrees of the various factors: 1) Local residency of the company's owners and employees, or 2) Local residency of the contractors involved in the project, or 3) Membership in local business organizations, or 4) Other similar factors. 6. PROCEDURES • Meet with appropriate Staff to discuss the scope of the project, define public assistance requested, identify public participation eligibility, and other information as may be necessary. • The request shall be reviewed by Staff on a preliminary basis as to the feasibility of the project. • The project concept shall be placed on the EDA agenda for concept review. The applicant will make a presentation of the project. Staff will present its findings. • If Economic Development Authority's concept review is positive, Staff will provide the City Council with an informational concept review. • The applicant will execute and submit the Preliminary Development Agreement accompanied by a deposit per approved fee schedule. • Building and site plans submitted to the Community Development Department. • If Planning and Zoning Commission action is required, it will be necessary for the applicant, at this time, to make application to the Commission. • Staff will authorize the following steps: - Preparation for establishment of the Tax Increment Finance District and the Tax Increment Financing Plan if required. - Preparation of the Purchase and Development Contract or Private Redevelopment Contract (Subsidy Agreement) based upon agreed terms. • When action is required for the Tax Increment Finance District and Plan, Purchase and Development Contract or Private Redevelopment Contract, or Zoning/Ordinance; the EDA, Planning Commission and City Council shall take appropriate action such as public hearings and consideration of approvals. 4 EDA - TIF' Business Subsidy Criteria • Building permit issued after the Tax Increment Finance District and Plan is approved by the City Council, the Purchase and Development Contract or Private Redevelopment Contract is executed by the developer and EDA, and the Building Permit Fees are paid. Eligible Tax Increment Finance expenditures: Land acquisition, site improvements, public improvements, demolition and relocation costs. Tax Increment Finance time: Generally six to eight weeks from time of authorization to begin drafting plan and contract. Zoning/Ordinance time: Varies per project. • 5 EDA 10.8.08 • 5. Public Hearin and a royal to amend EDA Business Subsid Criteria Greater Monticello Enterurise Fund) Guidelines. A. REFERENCE AND BACKGROUND: The Economic Development Authority (EDA) will need to open the public hearing. The Economic Development Authority (EDA) recently revised the Greater Monticello Enterprise Fund (GMEF) Business Subsidy Criteria. The amendments are minor and largely relate to changing references from HRA to EDA, due to the recent combining of the two authorities. The following is a list of amendments being proposed to the GMEF Business Subsidy Criteria: 1. References to HRA were changed to EDA 2. The federal minimum wage table was removed in order to eliminate referencing specific dates and minimum wage dollar amounts. The thought behind removing the table was to .eliminate referencing dates and figures that can become outdated or inaccurate on a frequent basis. • The table was replaced with the following language: "At lest 90% of the jobs created must pay a wage of the higher of $9.00 per hour, or at least 160% of the federal minimum wage, exclusive of beneFts, for individuals over the age of 20 during the term of assistance. Annual written reports are required until termination date. Failure to meet the job and wage level goals require partial or full repayment of the assistance with interest. 3. Within the Interest Rate section: "as published in the Wall Street Journal on date of EDA loan approval" was added. 4. Within the Terms and conditions for federal money section: "prime rate as published in the Wall Street Journal on date of EDA loan approval" was added. The City Council approved the proposed amendments at their September 22, 2008 meeting. There was no discussion regarding the changes. B. ALTERNATIVE ACTION: 1. Motion. to close the public hearing. 2. Motion to approve the amended Greater Monticello Enterprise Fund (GMEF) Business Subsidy Criteria. • 1 EDA 10.8.08 3. Motion to table any action on the amended Greater Monticello Enterprise Fund (GMEF) Business Subsidy Criteria. C. STAFF RECOMMENDATION: City Staff recommends approving the amended GMEF Business Subsidy Criteria. D. SUPPORTING DATA: The proposed amended Greater Monticello Enterprise Fund (GMEF) Business Subsidy Criteria is attached. • • 2 • EDA - GMEF Business Subsidy Criteria CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Business Subsidy Criteria Public Hearing and Adoption the 31't day of August, 1999 Public Hearing and Adoption of Amendments the 8th day of November 2000 Public Hearing and Adoption of Amendments the 24`h day of April 2001 Public Hearing and Adoption of Amendments the 13`h day of December 2005 Public Hearing and Adoption the day of , 2008 PURPOSE ~1 The purpose of this document is to establish the Economic Development Authority's (hereinafter referred to as EDA) criteria for granting of business subsidies, as defined in Minnesota Statutes 116J.993, Subdivision 3, for private development. This criteria shall be used as a guide in processing and reviewing applications requesting business subsidies. 1:02 The criteria set forth in this document are guidelines only. The EDA reserves the right in its discretion to approve business subsidies that vary from the criteria stated herein if the EDA determines that the subsidy nevertheless serves a public purpose. The EDA will file evidence of any deviation from these criteria with the Department of Trade and Economic Development in accordance with Minnesota Statutes, section 116J.994, Subd. Z. 1:03 The EDA may amend the business subsidy criteria at any time. Amendments to these criteria are subject to public hearing requirements pursuant to Minnesota Statutes, Sections 116J.993 through 116J.994. 2. STATUTORY LIMITATIONS 2:01 In accordance with the Business Subsidy Criteria, Business Subsidy requests must comply with applicable State Statutes. The EDA's ability to grant business subsidies is governed by the limitations established in Minnesota Statutes 116J.993 through 116J.994. 3. PUBLIC POLICY REQUIREMENT ~O1 All business subsidies must meet a public purpose in addition to increasing the tax base. Job retention may only be used as a public purpose in cases where job loss is imminent and demonstrable. M011'fICN LLO EDA - GMEF Business Subsidy Criteria 4. BUSINESS SUBSIDY APPROVAL CRITERIA 4:01 All new projects approved by the EDA should meet the following minimum approval criteria. However, it should not be presumed that a project meeting these criteria will automatically be approved. Meeting these criteria creates no contractual right on the part of any potential developer or the EDA. 4:02 The project must be in accord with the Comprehensive Plan and Zoning Ordinance, or required changes to the plan and ordinances must be under active consideration by the City at the time of approval. 4:03 Prior to approval of a business subsidies financing plan and when deemed appropriate by the EDA, the developer shall provide any required market and financial feasibility studies, appraisals, soil boring information provided to private lenders for the project, and other information or data as requested. 4:04 A recipient of a business subsidy must make a commitment to continue operations at the site where the subsidy is used for at least five years after the benefit date. 4:05 Recipients of any business subsidy will be required to meet wage and job goals determined by the EDA on a case-by-case. basis, giving consideration to the nature of the development, the purpose of the subsidy, local economic conditions, and situational circumstances. 4:06 The EDA may determine after a public hearing that job creation or retention is not a goal of the subsidy. In those cases, the recipient must instead meet at least one of the following minimum requirements (in addition to all other criteria in this document other than those relating to jobs and minimum wages): f "bli ted A. The proposed subsidy must accomplish removal, rehabilitation or redevelopment o gh areas" as defined in Minnesota Statutes, Section 469.002, Subd.l 1, or must constitute a cost of correction conditions that allow designation of redevelopment districts under Minnesota Statutes, Sections 469.174 to 469.179; or B. The proposed subsidy must result in improvements to public infrastructure or public facilities, including without limitations, sewers, storm sewers, streets, parks, recreational facilities, and other City facilities; or C. The proposed subsidy must remove physical impediments to development of land, including without limitations poor soils, bedrock conditions, steep slopes, or similar geotechnical problems. 4:07 For any business subsidy that does not meet the requirements of section 4:07, the recipient must create or retain jobs as determined by the EDA and must meet the minimum wage thresholds, described in Section 5:03,Greater Monticello Enterprise Fund Guidelines, 1.(b) (whether or not the source of the subsidy is tax increment financing). 5. GREATER MONTICELLO ENTERPRISE FUND PROJECT EVALUATION CRITERIA S:OI The EDA will utilize the Greater Monticello Enterprise fund to support the community's long-term economic goals. 2 EDA - GMEF Business Subsidy Criteria 5:02 Each Greater Monticello Enterprise Fund Application will be analyzed and evaluated by the EDA. Each project shall be measured against the general criteria in Sections 1 through 4 and the specific guidelines in this Section 5 applicable to the Greater Monticello Enterprise Fund. 5:03 Following are the evaluation guidelines that will be used by the EDA. • EDA -GMEF Business Subsidy Criteria GREATER MONTICELLO ENTERPRISE FUND GUIDELINES CITY OF MONTICELLO 505 WALNUT STREET, SUITE #1 MONTICELLO, MINNESOTA 55362 (763) 271-3208 INTRODUCTION The purpose of the Greater Monticello Enterprise Fund (GMEF} is to encourage economic development by supplementing conventional financing sources available to existing and new businesses. Through this program administered by the Economic Development Authority and participating lending institution(s), loans are made to businesses to help them meet a portion of their financing needs. All loans must serve a public purpose by complying with four or more of the criteria noted in the next section. In all cases, it is mandatory that criteria #1 be satisfied, which requires the creation of new jobs. It is the responsibility of the EDA to assure that loans meet the public purpose standard and comply with all other GMEF policies as defined in this document. Along with establishing the definition of public purpose, this document is designed to outline the process involved in obtaining GMEF financing. DEFINITION OF PUBLIC PURPOSE 1. To provide loans for credit worthy businesses that create new jobs. (a) One job is equivalent to a total of 37.5 hours per week. (b) At lest 90% of the jobs created must pay a wage of the higher of $9.00 per hour, or at least 160% of the federal minimum wage, exclusive of benefits, for individuals over the age of 20 during the term of assistance. Annual written reports are required until termination date. Failure to meet the job and wage level goals require partial or full repayment of the assistance with interest. 2. To provide loans for credit worthy businesses that would increase the community tax base. 3. To assist new or existing industrial or commercial businesses to improve or expand their operations. Considerations for loans shall take into account factors including, but not limited to, the nature and extent of the business, the product or service involved, the present availability of the product or service within the City of Monticello, the compatibility of the proposed business as it relates to the comprehensive plan and existing zoning policies, and the potential for adverse environmental effects of the business, if any. 4. To provide loans to be used as a secondary source of financing that is intended to supplement conventional financing (bank financing). 5. To provide Loans in situations in which a funding gap exists. 6. To provide funds for economic development that could be used to assist in obtaining other funds such as Small Business Administration loans, federal and state grants, etc. 4 EDA -GMEF Business Subsidy Criteria THE GREATER MONTICELLO ENTERPRISES REVOLVING LOAN FUND POLICIES BUSINESS ELIGIBILIT Y * Industrial businesses. * Non-competitive commercial businesses which enhance the community. * Businesses located within the City of Monticello. * Credit worth existing businesses. * Non-credit worthy start-up businesses with worthy feasibility studies (Deny all historical non- credit worthy businesses). * $10,000 loan per each job created, or $5,000 per every $20,000 increase in property market valuation, or $5,000 per every $20,000 increase in personal property used for business purposes, whichever is higher. II. FINANCING METHOD COMPANION DIRECT LOAN - Example: Equity 20%, RLF 30% and bank 50%. (All such loans may be subordinated to the primary lender(s) if requested by the primary lender(s). The RLF loan is leveraged and the lower interest rate of the RLF lowers the effective interest rate on the entire project.) * PARTICIPATION LOAN - RLF buys a portion of the loan (the RLF is not in a subordinate position, no collateral is required by the RLF and the loan provides a lower interest rate). GUARANTEE LOANS - RLF guarantees a portion of the bank loan. (Personal and real estate guarantees handled separately.) III. USE OF PROCEEDS Real property acquisition and development Real property rehabilitation (expansion or improvements) Machinery and equipment IV. TERMS AND CONDITIONS * LOAN SIZE - Minimum of $25,000 and maximum not to exceed 50% of the Remaining revolving loan fund balance; for example, if the remaining revolving loan cash fund balance is $50,000, the maximum loan issuance is $25,000. * LEVERAGING - Minimum 60% private/public non-GMEF Maximum 30% public (GMEF) Minimum 10% equity EDA loan 5 EDA - GMEF Business Subsidy Criteria * LOAN TERM - Personal property term not to exceed life of equipment (generally 5-7 years). Real estate property maximum of 5-year maturity amortized up to 30 years. Balloon payment at 5 years. INTEREST RATE - Fixed rate not less than 2% below prime rate as published in the Wall Street Journal on date of EDA loan approval. LOAN FEE - Minimum of $200 but not to exceed 1.5% of the total loan project or a minimum fee of $200. * Fees are to be documented and no duplication of fees between the lending institution and the RLF. Loan fee maybe incorporated into project cost. EDA retains the right to reduce or waive loan fee or portion of loan fee. *Fee to be paid by applicant to the EDA within 5 working days after City Council approval of GMEF loan. Non- refundable. * * PREPAYMENT POLICY - No penalty for prepayment. DEFERRAL OF PAYMENTS - 1. Approval of the EDA membership by majority • vote. 2. Extend the balloon if unable to refinance, verification letter from two lending institutions subject to Board approval. * LATE PAYMENT POLICY - Failure to pay principal or interest when due may result in the loan being immediately called. In addition to any other amounts due on any loan, and without waiving any right of the Economic Development Authority under any applicable documents, a late fee of $250 will be imposed on any borrower for any payment not received in full by the Authority within 30 calendaz days of the date on which it is due. Furthermore, interest will continue to accrue on any amount due until the date on which it is paid to the Authority, and all such interest will be due and payable at the same time as the amount on which it has accrued. INTEREST LIMITATION ON GUARANTEED LOANS - Subject to security and/or reviewal by EDA. 6 EDA -GMEF Business Subsidy Criteria * ASSUMABILITY . OF LOAN - None. * BUSINESS EQUITY REQUIREMENTS - Subject to type of loan; Board of Directors will determine case by case, analysis under normal lending guidelines. * COLLATERAL - * Liens on real property in project (mortgage deed). * Liens on real property in business (mortgage deed). * Liens on real property held personally (subject to Board of Directors -homestead exempt). * Machinery and equipment liens (except equipment exempt from bankruptcy). * Personal and/or corporate guarantees (requires unlimited personal guarantees). * NON-PERFORMANCE - An approved GMEF loan shall be null and void if funds are not drawn upon or disbursed within 180 days from date of EDA approval. * NON-PERFORMANCE EXTENSION - The 180-day non-performance date can be extended up To an additional 120 days. 1. A written request is received 30 days prior to expiration of the 180-day non-performance date. 2. Approval of the EDA membership by majority vote. * LEGAL FEE - Responsibility of the GMEF applicant. The Greater Monticello Enterprise Fund is operated as an equal opportunity program. All applicants shall have equal access to GMEF funds regardless of race, sex, age, marital status, or other personal characteristics V. ADDITIONAL CRITERIA FOR LOANS ORIGINATING THROUGH SMALL CITIES ECONOMIC DEVELOPMENT SET-ASIDE GRANT FUNDS * Compliance with federal labor standards laws, including: The Davis-Bacon Act, which requires that workers receive no less than the prevailing wages being paid for similar work in the locality when the contract, financed in whole or part with federal funds, exceeds $2,000; i The Contract Work Hours and Safety Standards Act, which requires that workers receive overtime compensation at a rate of 1-1 /2 times their regular wage after they have worked 40 hours in one week; 7 EDA -GMEF Business Subsidy Criteria The Copeland "Anti-Kickback" Act, which requires that workers be paid at least once a week without any deductions or rebates except permissible deductions which include taxes, deductions the worker authorizes and those required by court processes. * Compliance with federal fair housing and civiUhuman rights laws and with the Minnesota Human Rights law, which forbids discrimination in credit, employment, housing, public accommodations, public service and education on the basis of race, color, creed, religion, national origin, sex marital status, disability, sexual orientation, public assistance or familial status. Compliance with the Low and Moderate Income (LMI) Benefit National Objective, which, in the economic development context, has as its goal the creation and retention of jobs, of which a minimum of 51 % must be held by LMI persons, defined as a member of a family having an income less than or equal to the Section 8 low-income limit established by the U.S. Department of Housing and Urban Development (HUD). Compliance with requirements of the National Environmental Policy Act (NEPA) of 1969, as amended, and preparation of an Environmental Review Record. Compliance with Section 104(d) of the federal Housing and Community Development Act of 1974, as amended, which requires that any reduction in LMI dwelling units in the community must be offset by the creation of similar affordable units and relocation assistance to displaced LMI families; and with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, which mandates procedures to ensure fair and equitable treatment for persons displaced by projects designed for the public good. Terms and conditions for federal money: Interest Rate: 0% with balloon payment in three years or fixed rate not less than 3% below prime rate as published in the Wall Street Journal on date of EDA loan approval with balloon payment in five years. All other terms and conditions are as outlined in The Grater Monticello Enterprises Revolving Loan Fund Policies, Section IV, above. ORGANIZATION The Greater Monticello Enterprise Fund is administered by the City of Monticello EDA, which is a seven- member board consisting of two Council members and five appointed members. EDA members are appointed by the Mayor and confirmed by the City Council. Regular meetings are held on a monthly basis. Please see the by-laws of the EDA for more information on the structure of the organization that administers the Greater Monticello Enterprise Fund. PARTICIPATING LENDING INSTITUTION(S) l . Participating lending institution(s) shall be determined by the GMEF applicant. , EDA -GMEF Business Subsidy Criteria 2. Participating lending institution(s) shall cooperate with the EDA and assist in carrying out the policies of the GMEF as approved by the City Council. Participating lending institution(s) shall analyze the formal application and indicate to the EDA the level at which the lending institution will participate. in the finance package. LOAN APPLICATION/ADMINISTRATIVE PROCEDURES The EDA desires to make the GMEF loan application process as simple as possible. However, certain procedures must be followed prior to EDA consideration of a loan request. Information regarding the program and procedures for obtaining a loan are as follows: City Staff Duties: The Economic Development Director, working in conjunction with the City Administrator, shall carry out GMEF operating procedures as approved by the EDA and Council. Staff is responsible for assisting businesses in the loan application process and will work closely with applicants in developing the necessary information. Application Process: 1. Applicant shall complete a preliminary loan application. Staff will review application for consistency with the policies .set forth in the Greater Monticello Fund Guidelines. Staff consideration of the preliminary loan application should take approximately one week. Staff will ask applicant to contact a lending institution regarding financing needs and indicate to applicant that further action by the EDA on the potential loan will require indication of support from a lending institution. 2. If applicant gains initial support from lending institution and if the preliminary Loan application is approved, applicant is then asked to complete a formal application. If the preliminary loan application is not approved by staff, the applicant may request that the EDA consider approval of the preliminary application at the next regularly scheduled meeting of the EDA. 3. If the preliminary loan application is approved, applicant shall complete a formal application. Formal application shall include a business plan which will include its management structure, market analysis, and financial statement. Like documentation necessary for obtaining the bank loan associated with the proposal is acceptable. Attached with each formal application is a written release of information executed by the loan applicant 4. City staff will meet with applicant and other participating lender(s) to refine the plan for financing the proposed enterprise. 5. City staff shall analyze the formal application and financial statements contained therein to determine if the proposed business and finance plan is viable. Staff may, at its discretion, accept the findings of a bank institution regarding applicant credit and financial viability of act the project. After analysis is complete, City staff shall submit a written recommendation to the EDA. A decision regarding the application shall be made by the EDA within 60 days of the submittal of a completed formal application. 9 EDA -GMEF Business Subsidy Criteria 6. The EDA shall have authority to approve or deny loans; however, within 21 days of EDA approval, the City Council may reverse a decision by the EDA to approve a loan if it is determined by Council that such loan was issued in violation of GMEF guidelines. 7. Prior to issuance of an approved loan, the City Attorney shall review and/or prepare all contracts, legal documents, and intercreditar agreements. After such review is complete, the City shall issue said loan. REPORTING 1. Staff shall submit quarterly summaries and/or annual report detailing the status of the Greater Monticello Enterprise Fund. FUND GUIDELINES MODIFICATION 1. At a minimum, the EDA shall review the Fund Guidelines on an annual basis. No changes to the GMEF guidelines shall be instituted without prior approval of the City Council LOAN ADMINISTRATION 1. City staff shall service City loan, shall monitor City position with regard to the Loan, and shall assure City compliance with intercreditor agreement. 2. All loan documents shall include an intercreditor agreement which must include the following: A. Definition of loan default, agreements regarding notification of default. B. Agreements between lending institution and City regarding reproduction of pertinent information regarding the loan. 3. All loan documentation shall include agreements between borrower and lenders regarding release of privacy regarding the status of the loan. • 10 EDA - GMEF Business Subsidy Criteria der the GMEF Guidelines use of proceeds for real property acquisition and development, real roperty rehabilitation (expansion or improvements) and machinery and equipment. The following commentary is intended to assist developer with those costs typically considered eligible: Real Property Acquisition and Improvement Costs Land Acquisition Building Permit Fees Building Materials Construction Labor Landscaping Grading Curbing/Parking Lot Machinerv and Equipment Costs Eagineer/Design Inspection Fees Architect Fees Soil Borings Appraisal Fees Legal Fees Environmental Study Recording Fees Title Insurance Personal property used as an integral part of the manufacturing or commercial business, with a useful life of at least three years. Acquisition costs would include freight and sales taxes paid. As a general rule, office equipment would not qualify. • 11 EDA 10.8.08 • 6. Update and Expansion of TIF Management Plan. Background: Upon the hiring of the new Economic Development Director, great strides have been attempted to get a handle on the City's existing TIF Districts. A meeting between Ehlers and staff was held to begin educating staff on the history of utilizing TIF within the City. During this meeting it became quite clear that. a complete analysis of the TIF districts should be completed. Information pertaining to how each district is cash flowing, what expenses have gone into creating each TIF district, what administrative costs are associated with creating and maintaining these districts, and if there are any other opportunities within the districts for future improvements; has not been analyzed for almost three years and to be most effective, the information should really be complied into one centralized document. Ehhers submitted a proposal to update the City's TIF management plan. The .proposal includes analyzing each TIF districts financials, providing an integrated analysis and • .strategy for pooling surplus revenues to fund TIF-eligible improvements, redeeming existing debt obligations, and recommendations on decertifying TIF districts, and/or other management options. The cost to complete the proposed analysis is $12,950.00. This cost can be paid as an administrative cost within the TIF districts. Elhers would. work closely with staff and the EDA to provide detailed understanding of the information generated and they will provide specific financial recommendations to the EDA and City Council on any methods that would help increase district financial vitality. Staff Recommendation: The city has established a work plan for the. Economic Development Director to develop familiarity, knowledge, and understanding of the City's TIF districts. The Director's work plan further states the expectation to be pro-active in finding funding resources for redevelopment opportunities and also in providing financing packages to potential new businesses. The ability to look within the City's TIF districts, to be able to analyze what districts are healthy and which ones are suffering will provide invaluable knowledge in structuring future business deals. It should also be noted that obtaining this detailed financial information, the history, present, and future recommendations, will lend to more educated based methods in how we: 1. market industrial land 2. Administer fees 3. Structure assistance packages 4. the ability to understand redevelopment potential with use of TIF funding 5. understanding of funds available for the Transformation Loan Program. 6. other opportunities to be determined As stated above, the cost of the $12,950.00 can be distributed as an administrative cost within the TIF districts. The overall impact to each district will be very nominal compared to the invaluable information and resource tool the City will have at hand in making financially educated decisions for the future. Action: 1. Motion to approve the proposal by Ehlers to provide an Update and Expansion of the City's TIF Management Plan at a cost not to exceed $12,950.00 2. Motion to deny the proposal by Ehlers to provide an Update and Expansion of the City's TIF Management Plan. 3. Motion to table action for further information. • • • EDA 10.8.08 7. TIF District and Proiect Record Management. Background: Upon my (the new Economic Development Director) starting at the City of Monticello, I have spent time reviewing all documentation complied by the previous Economic Development Director. Great effort has been made to compile information when possible, update data sources when applicable, and organize files/information in a systematic/orderly fashion. The previous Director had great knowledge and the advantage of 22+ years in working with the City's TIF, Districts. To the great tribute of the previous Director, a lot of TIF District information was stored in memory. In my efforts to compile data, I have run into some challenges. Documentation is often in several different areas (finance, Economic Director, and Ehlers), or is missing at the City, and there does not appear to be a cohesive method in organizing and filing all necessary documentation. Ehhers submitted a proposal to assist the Economic Development Director in pulling documentation for all 34 TIF Districts from the City's files and their files, determining what key documents are missing, assist to obtain all necessary documents, compiling all TIF District related documents into an organized records retention program, developing a checklist for existing and future TIF Districts. The proposed cost by Ehlers is $7,400 to complete a comprehensive organized TIF District records retention system. This cost can be accounted as an administrative cost to the TIF Districts. Staff Recommendation: The city has established a work plan for the Economic Development Director to develop familiarity, knowledge, and understanding of the City's TIF districts. There is massive amount of history and information regarding a1134 districts. In order to be most efficient and cost effective, staff will need the resources obtained by Ehlers in order to accomplish a complete understanding and organization of the City's TIF records. Staff would like to point out that the proposed $7,400 cost does seem to be a little on the high side. The cost is based on an anticipated hourly block of 40 hours. However, staff is confident and more than willing to attempt to reduce the proposed cost by working efficiently in house. As stated above, the cost of the $7,400.00 can be distributed as an administrative cost within the TIF districts. The overall impact to each district will be very nominal • compared to the invaluable information and resource tool the City will have at hand. Action: Motion to approve the proposal by Ehlers to assist in completing a TIF District and Project Records Management project at a cost not to exceed $7,4000.00. 2. Motion to deny the proposal by Ehlers to assist in completing a TIF District and Project Records Management project. 3. Motion to table action for further information. • • • EDA 10.8.08 8. Billboard Message Background and Reference: The City leased a billboard along I-94 from May till December of 2008. The City has already pre-paid for two billboard messages. Since a second message change order has already been paid for, it would seem fitting to display a new message from October till December. The current message on the billboard focuses on the $1.00 per square foot land price. While this message is effective in marketing the City's competitive land prices, it would seem appropriate to revisit the current message and focus on different attributes in the City. Recommendation: The marketing committee is recommending that the billboard be changed to a message that markets the City Fiber Optics (see attached layout). • Action: 1. Motion to approve the new fiber optic message and authorize staff to work with Lamar to begin production of the new message. 2. Motion to deny the proposed message and direct staff to work on a new message 3. Motion to table action for further information. Attachments 1. Proposed new message. • u • 9. Report from Committees. • Membership• Due to the hiring of a new Economic Development Director, it would be helpful to review each committee's membership. At a future EDA meeting, discussion should ensue regarding each of the sub-committees "job description." Committees Higher Education: Met on August 21, 2008. The committee established their vision and mission statement. At their September 4tb meeting they discussed what their next step should include, however the Committee has not agreed on their next step. They will be further discussing this at their October 2, 008 meeting. Staff will provide a verbal report regarding the outcome. Once the Higher Education Committee has determined what their objectives and logical next step should be, staff will be presenting this information to the City Council for discussion on how the Council would like to formally recognize the committee. Draft vision statement: To promote higher education to better develop our economy, community, and our people. • Draft Mission Statement: Listen to our stakeholders and meet their needs by adapting to the changing business and community environment and strengthen the bonds between our community and its people. We will create learning opportunities by building partnerships and be right sized. Marketing: The Marketing Committee met on Thursday, October 2, 2008. Housing Committee: Staff will be meeting with the MN Housing Finance Agency on October 13, 2008. Fiber Optics: Verbally report at meeting. • 1 • rn~ x ~ ~• 3 w 3 1 y '0 S = ~ O ~D y 7 n O 3 3 rn ~ O w ~ ~ W ~ 7 v c~ o~°~c ~ D. C T ~ ~ ~ O ~~ (~ ~I V V V ~ ~ ~ ~ W W W W W N IV N O ~ CO CD O W U1 U7 OD ~1 00 CJ1 -~ 01 ~l CO -~ N N CO Oo U~ 00 O -~ ~ ~ o- ~ ~ m a~ m ~ c y ~ ~ N 0 3 ~ a .~ io 0 ~ a ~ ~ c o 3 ~nDD 3 3 ~ ~ ~ Q' (D fD 1 '7 rn~ x ~ ~• 3 y !D N 3 O 7 m 3 O W 1 y d 7C ~D .~- 7 n O 3 3 ~: .. e~ e~ to • • • • 10. Re ort from Executive Director. EDA 10.8.08 A. Review of preliminary work outline: As the EDA may be aware, with the approval of Megan Barnett as the City's new Economic Development Director, the City Council requested aone-year probationary period, with a clear work plan put into place. As part of the 6-month and one-year review process, the position would be evaluated against the job description and the work plan. Angela Schumann and Jeff O'Neill have created a draft work plan for the Economic Development Director. The work plan is a set of strategic objectives based on the job description for the position, as well discussions and project outcomes previously stated by the City Council, EDA and IEDC.. The work plan is divided into six major areas. • Existing Programs • Business Retention • Business Recruitment • Fiber Optics • Downtown Revitalization/Redevelopment • Support & Coordination These areas cover both developing familiarity with existing programs and building new programs to support City Council, EDA and IEDC goals. Megan has already begun developing and completing specific tasks related to accomplishing the strategic goals. She has .made great strides in setting her foundation of information and resources for moving forward. B. IEDC: At their September 2, 2008 meeting, the IEDC broke into working groups to discuss the following topics: a. Transportation/Infra-structure b. Land c. Business Retention d. Marketing & Communication. Challenges and opportunities were discussed at the meeting. It is the intention of the IEDC to generate goals, objectives, and a working plan for the upcoming year at their regularly scheduled October meeting. Attached is the staff report. The IEDC will be meeting on October 7, 2008 to further discuss and generate ideas in the specific areas. Attached is the staff report. As part of this discussion, staff would like to discuss with the EDA the creation of a business newsletter. The idea is to provide a consistent communication piece to .the business community at large. The newsletter could contain a section from the IEDC, EDA, City Council, business spotlight, and general City update information. Staff will provide a sample newsletter at the meeting. The following information was provided to the IEDC in their October agenda. "The initiation of a "business newsletter" seems to have full support by the IEDC. Staff would like to establish a target date of January 1, 2009 for the first newsletter to be published. Due to budget and staff constraints, it would seem most effective • 1 EDA Agenda - 10/08/08 and efficient to have one business newsletter that incorporates IEDC, EDA, City Council, and staff sections. This will also provide a cohesive message to the business community. As a starting point the newsletter could be published every three months. It would be staff's hope to obtain business emails during the early part of 2009. In the event additional news or information was desired to be distributed to the business community, it could be emailed instead of publishing a full newsletter prior' to a 2-3 month schedule. It should be mentioned, that all business publications will be posted on the website. In order to begin drafting the first newsletter a few pieces of information will need to be discussed and established: 1. Establishing a name for the news letter (please email me your ideas and I will tabulate them for the meeting megan.bamett(a~ci.monticello.mn.us ) 2. Who should be the first Business Spotlight? Creating a list of both industrial and commercial businesses would be productive. Rotating between an industrial and commercial (retail) vendor would allow great diversity and awareness of Monticello's business community. Site visit events would be part of the business spotlight. 3. Determine an IEDC member to assist in writing the first article for the IEDC section. 4. As part of the newsletter, a business survey could be developed. It is also important to note that the City's Website could be utilized for this type of transaction and communication. Staff would like to obtain insight and comments from the EDA regarding the initiation of a business newsletter. There are monies in the Economic Development budget that could cover the cost of this publication. C. Business Retention: This section is being addressed as part of the IEDC section. D. Business Initiative: Staff has been diligently researching growing markets in a time of slow economy. According the DEED (Department of Employment & Economic Development), "but there are pockets of growth in Minnesota, such as medical device manufacturing, education and health care, and financial activities sectors." Staff is also in the process of meeting local leaders and attending events that provide a wide range of networking opportunities. E. 413 W. 4th Street Property_ At the May EDA meeting, the EDA directed staff to negotiate the purchase of the property located at 413 W 4th Street. A purchase price of $52,000 was agreed upon. The property is currently within the required redemption period, which expires on October 15, 2008. It is staff s understanding that the City is the only entity that bid on the subject property. However, the City will be notified sometime after the redemption period expires confirming the offer was accepted or rejected. F. Informational Handouts: Staff would like to utilize this section to provide the EDA members with any articles or pieces of information that may come across the Economic Development Directors desk that could be of interest to EDA members. See Atttached. G. Future Agenda Items: The next EDA meeting will be Wednesday, November 12, 2008. Upcoming agenda topics will include:l.Sub-committee job descriptions 2.Review information pertaining to underutilized properties, City owned properties, and properties within the TIF districts. 3.Consideration to review Development Agreement /Private Contact administrative costs and fees/deposits. 2 • IEDC 10.7.08 4. Break-out Working Groups: The IEDC held a strategic planning workshop at their September 2008 meeting. The workshop generated many valuable ideas and potential future IEDC work plan objectives. The committee will be breaking into visioning sessions to continue to refine issues, challenges, and objectives. Below are the results of the work session and additional staff comment and input. Transportation• Staff Comment: The City Council held a Transportation Workshop on September 22, 2008. 'The Council received a lot of good input from the business community regarding the closing of River Street and a future interchange along County Road 39. A draft copy of the Transportation Plan is anticipated to be reviewed by the City Council in October. The IEDC will be notified of that date when set. IEDC Input Third Interchange for City of Monticello. -Provide input to staff and City Council for development of interchange and its location. An interchange needs to be completed to enhance the Monticello business community as an interchange is a key driver for a business location, especially for manufacturing and industry. • Key transportation routes in the City of Monticello. It was noted that the City of Monticello is completing its Transportation Study. The city's plan will be presented at a meeting scheduled for September 22 (S p.m.) -Second Mississippi River crossing needs to be looked at. Local jurisdiction will most likely have to initiate this effort and take it to the next level. Consideration of a way to jointly fund transportation issues on a more regional level especially since once you cross the Mississippi River form Monticello City limits you enter into Big Lake Township, Becker Township and the City of Big Lake. Perhaps they should be included in the planning. Currently there is a joint transportation group that the City of Monticello participates in along with Big Lake. How can IEDC have input with this? A Capital Improvement Fund could also be developed by the city for funding future transportation needs in order to establish a community commitment towards these efforts. -Take into consideration that Big Lake.will soon have train transport along Highway 10 via the Northstar Commuter Rail. How do we take advantage of this and facilitate bus/van transport if needed between Monticello and Big Lake. -The Chamber is passing resolution to work with a group of other Chambers and communities to support expansion of 8 to 10 lanes along I-94 including areas between Maple Grove and Monticello. How can the city and IEDC take advantage of this (ie. bus/van from Monticello to Maple Grove?) -Market the fact that our community has the advantage of being located within driving distance to the St. Cloud Airport. - What is the timeframe for completion of access for Seventh Street? This route needs consideration as it is becoming a major route within the city because of Interchange developments. Land Use: Staff Comment: Staff is in the process of researching growing business industries within MN and surrounding areas. According to DEED (MN Department of Employment and Economic Development), pockets of growth in MN are still occurring "Medical device manufacturing, Education and Health Care, and Financial Activities." Another industry to track is the manufacturing of technology components. IEDC Input: Identify industrial land available within the city limits currently and provide input and planning ideas for what will be needed in the future. -Identify what types of business aze suitable to these areas and will provide livable wage jobs in Monticello. Evaluation to include business that is a compliment to industrial (ie. conference center, higher end hotels and dining experiences, etc.) -Determine if the city should purchase additional land for its own development and/or designate additional areas for industrial zoned land which could be purchased by developers. • Define how infrastructure relates to land use - Identify what types of infrastructure are necessary for successful economic growth and development (ie. fiber optics, roads, sewer, water, etc.) and identify funding for infrastructure. Evaluate the possibility of a joint infrastructure plan on a more regional level (ie. sharing wastewater treatment plant or transportation costs.) Business Retention: Staff Comment: The initiation of a "business newsletter" seems to have full support by the IEDC. Staff would like to establish a target date of January 1, 2009 for the first newsletter to be published. Due to budget and staff constraints, it would seem most effective and efficient to have one business newsletter that incorporates IEDC, EDA, City Council, and staff sections. This will also provide a cohesive message to the business community. r~ ~J As a starting point the newsletter could be published every three months. It would be staff s hope to obtain business emails during the early part of 2009. In the event additional news or information was desired to be distributed to the business community, it could be emailed instead of publishing a full newsletter prior to a 2-3 month schedule. It should be mentioned, that all business publications will be posted on the website. In order to begin drafting the first newsletter a few pieces of information will need to be discussed and established: 1. Establishing a name for the news letter (please email me your ideas and I will tabulate them for the meeting mean.barnett(a~ci.monticello.mn.us ) 2. Who should be the first Business Spotlight? Creating a list of both industrial and commercial businesses would be productive. Rotating between an industrial and commercial (retail) vendor would allow great diversity and awareness of Monticello's business community. Site visit events would be part of the business spotlight. 3. Determine an IEDC member to assist in writing the first article for the IEDC section. 4. As part of the newsletter, a business survey could be developed. It is also important to note that the City's Website could be utilized for this type of transaction and communication. Networking Event.• Staff would like to propose establishing anIEDC/EDA annual business networking meeting event. The idea would be to invite all businesses for an evening of networking and "special event." A few examples could be a wine/food tasting event, silent auction, motivational speaker, entertaining speaker, etc. In an attempt to separate this event from other organization events (i.e. golf tournaments, chamber year end banquet, etc.), Staff would propose hosting the annual event in early Spring (March, April, May). Staff would also like to discuss establishing one or two breakfast "City Update" events throughout the year. The idea of these events would be to invite the whole business community to a breakfast where they could be updated on various projects and initiatives the IEDC/EDA & City Council are undertaking. Another idea would be to work in conjunction with the Chamber of Commerce for one of the "City Update" events. The entire business community would be invited to a Chamber Lucheon, where the speakers would provide an update on what is happening in the City. Since the Chamber Lucheon's require a fee to be paid, it would see appropriate to also offer a free breakfast networking/update experience hosted by the IEDC/EDA. IEDC Input: Identify issues as well as the positives within the business community. Stay in touch with the business community -Newsletter from IEDC sent by direct mail to business community - Business survey with questions developed by IEDC with input from City Staff. Survey interviews done face-to-face by non-staff and in written form with opportunity for anonymity by businesses to allow freedom to express honest viewpoints. The objective would be to obtain information from the business community that reflected both strengths and weaknesses so both could be addressed. The survey would initially be done first with the manufacturers and industrial businesses since this is the primary focus of IEDC. -Personal visits to manufacturing and industrial businesses on a 3 regular basis as a means to stay connected in this order: new companies recently located in the community, growing companies and those who have recently acquired new neighbors. • Networking event in the form of an annual banquet for socializing - Evening event with main speaker yet ample time for social hour and sit-down meal that encourages socializing before and after. - Event could be a joint planning effort with Chamber but should be focused on the manufacturing and industrial business segments. Marketing & Communication: Staff Comment: In these economically challenging times, it will be most important to be budget conscious and cohesive while marketing Monticello/City owned land. Joint marketing ads and publication pieces and use of website will continue to be key in marketing efforts. Staff is in the process of further updating the City's website to be more user friendly to both the existing and future business community. Staff participated in a very preliminary discussion regarding initiating a City wide Monticello identity exercise. 'The Center for Community Stewardship is a group that helps communities "jump-start the success of a community by empowering its most powerful asset -its leaders." The idea is this group will help stream line the visioning process to ultimately determine a common identity message about Monticello. IEDC Input: Create an understanding and awareness of IEDC. -Newsletter developed by IEDC with articles written by IEDC members and spotlighting various manufacturing and industrial businesses in the community. Make the business community aware of the IEDC Action Statement, our Mission along with the results and progress of our subcommittee work in the areas of. Business Retention, Land Use and Transportation as they are all interrelated with marketing and communications. -Evening social event to encourage business fellowship. -Provide input, ideas and recommendation to the Monticello Marketing Committee for development of a strategy for marketing Monticello to the type of business we wish to attract (especially in the area of manufacturing and industrial related businesses) by defining what attributed we have as a community and what type of business we want to bring to the city. The Monticello Marketing Committee may decide to include a more comprehensive view of promoting Monticello to include not only input from the city side but also from Chamber, schools, hospital district and major utilities like Xcel as more of a group effort. Depending on the funds available, this effort may include hiring an outside commercial firm for assistance with a strategy and development of a plan to market Monticello as a whole. Recommendation: • • Staff would like to obtain input and preliminary decisions regarding the business newsletter. $ ~ ~ '~ r Minnesota = Home Ownership Center The Minnesota Home Ownership Center is the state's leading independent, nonprofit provider of information and resources aimed at helping all Minnesotans to begin and maintain home ownership. Since 1993, we have served over 87,000 Minnesotans through our range of home ownership services, from pre-purchase education to foreclosure prevention counseling. HOME OWNERSHIP SOLUTIONS Through our partnerships with nonprofit service providers, .governments and business organizations, we provide resources, information and technical assistance to all Minnesota first-time home buyers and home owners facing foreclosure. In particular, we work to help low- and moderate-income people and families statewide achieve and sustain home ownership. ^ Resources for Home Buyers. The Minnesota Home Ownership Center is committed to making new home ownership attainable for Minnesota families and communities through its first-time home buyer education services. Across Minnesota, 38 community nonprofit organizations offer the Center's Home Stretch classes for first-time home buyers in three languages. This nationally-recognized curriculum provides potential buyers with important information about the buying process, and our network of counselors is available to provide personalized follow-up planning and budgeting assistance. Sustaining Home Ownership. The Center is equally committed to empowering Minnesota home owners to keep their homes through foreclosure prevention efforts. Twenty-three nonprofit partners across Minnesota provide .free, individualized planning and ~nancia/ counseling services to home owners in danger of foreclosure, and advocate on behalf of home owners with lenders and other institutions. LEADING PARTNERSHIPS TO ADDRESS THE MORTGAGE CRISIS In 2008, 80,000 Minnesotans are expected to miss at least one mortgage payment and more than 28,000 Minnesota homes are projected to be foreclosed upon. In partnership with the Greater Minnesota Housing Fund, the Family Housing Fund, and Minnesota Housing, the Minnesota Home Ownership Center is at the forefront of responding to the mortgage crisis. The Center is leading increased public education and supportive counseling services through new outreach initiatives and its network of statewide partners. • vvww.hocmn.org 1t ~ Minnesota ~ Home C)wvnership tenter In Minnesota and across the United States, non-traditional loans -mortgages with varying rates and payments, as opposed to a traditional, fixed-rate loan -became popular between 2003 and 2005. For perspective, non-traditional loans constituted 8 percent of new loans issued nationwide in 2003, but made up 20 percent of new loans issued in both 2005 and 2006'. The holders of these loans now. are being disproportionately impacted by the economy's downturn and mortgage crisis. TWO TYPES OF NON-TRADITIONAL LOANS ^ Alt-A Loans are typically higher-balance loans made to borrowers with some credit problems, but not severe credit issues like a bankruptcy. In other instances, Alt-A loans are made to people who qualify for a traditional loan, but choose anon-traditional loan for investment or other reasons. - Many Alt-A loans have adjustable interest rates after a set introductory period, typically two to three years. - Cun-ently, more than 31,000 Minnesota homes are financed byAlt-A mortgages. ^ subprime Loans are provided to home buyers with limited income documentation or a blemished credit history. - The loans are primarily characterized by an introductory low, fixed-rate payment, followed by an escalating or adjustable-rate repayment schedule. - Cun-ently, 68,000 Minnesota homes are financed by subprime loans. The lYatinnai Narner~vuraership Bate P~sa~kea )ire Su~prian~ l:®ndia~ Taet€c Q4t Subpr~~e Share Nemeowttersi~r,'r flare of tVloRga9e ~riginattans «?arcz~- IPercarcf ~t --- --- -_ .. _~_ _:.__._ _--- sa ~, ,c -- ___- - - -- - - - - sr 9 - - -- - -- - fib g ~ B4 u _~. ~, tsso ,vas tve, rave mo+ wai was mor ^ Sutquime Sltere ! He~enwrrers#tpt Bete Nape 9uEnnmB ~^aisuL ahsJoNx.ail~nedd4apa.Cmc 5ouroea: US ^.areW OuanV, MawnpVe®nppSwral' 4~¢dr Mupye.Fmoo4 :A Borate: 'State ofthe Natan's Housing 2IXIB,'ldnt Centerfor Housing Smdks at FWrvaM I/ni~rsiry IMPACTING MINNESOTA FAMILIES AND COMMUNITIES Home owners with non-traditional mortgages are more likely to face late payments, and potentially foreclosure, than holders of traditional mortgages. ^ As of June 2008, more than 5,500 of Minnesota's Alt-A mortgages were delinquent, as were more than 30,000 sub-prime mortgages.z ^ At the same time, 11,900 non-traditional loans were 90 days delinquent or in foreclosure. ^ In 2008, nearly one-third of Minnesota's subprime loans will reset to a higher payment, as will 8 percent of the state's Alt-A loans. As adjusting mortgage payments compound with inflation in food, gas and other necessities, Minnesota households with non-traditional mortgages are becoming increasingly vulnerable to missed payments, economic hardship and even foreclosure. ' "State of the Nation's Housing 2008,"Joint Center for Housing Studies at Harvard University z Dynamic Maps of Nonprime Mortgage Conditions,"New York Federal Reserve • • www.hocmn.org t ~ Minnesota ~ ~ lHar~e Clwnershp aCenter HOME OWNERS ARE STRUGGLING TO KEEP UP In Minnesota and across the nation, home owners facing foreclosure and those who report missing mortgage payment are struggling to balance important challenges: changing loan payments and/or external changes such as a divorce, major unexpected bill or the increasingly inflated costs for needs tike food and gas. The struggles cut across all walks of life -from elderly couples who fell behind on a second mortgage taken to cover a hospital stay or emergency expense, to optimistic young professionals who took the wrong loan at the wrong time. ^ Other home owners have been victim to predatory lending practices, unwittingly jeopardizing the future of their most valuable asset -their home. ^ This year 80,000 Minnesotans are expected to miss at least one mortgage payment. ^ If projections hold true, by the end of the year one of every 31 Minnesota mortgages will have been foreclosed between 2005 and 2008. RESOURCES TO MOVE MINNESOTA FAMILIES FORWARD The state's mortgage crisis reaches beyond home owners in the foreclosure process to the thousands of Minnesotans struggling to keep up, let alone to get ahead. For these home owners, the best solution is mortgage support counseling from the Minnesota Home Ownership Center's free, trusted network of nonprofit counselors, which is recognized by the Department of Housing and Urban Development (HUD) for high quality. Counselors are helping home owners find answers to important questions like: Are you worried about being stuck in your mortgage? At the end of the month, do you find yourself struggling to get ahead, or even to keep up? Are you questioning the future because you worry about how you will make ends meet today? Home owners from all walks of life are struggling to make ends meet. If you or someone you know answered "yes" to any of these questions, contact the Minnesota Home Ownership Center at (866) 462-6466 or online at www.hocmn.org. The answers are free, confidential and only a call or click away. www.hocmn.org Across Minnesota, home owners, families and communities have been struck by the state's faltering economy and growing mortgage crisis. Between 2005 and 2007 more than 38,000 mortgages were foreclosed in the state; another 28,000 foreclosures are projected for 2008 alone. As you think about your home and your mortgage, consider: . Are you feeling stuck in your mortgage? . At the end of the month, do you find yourself struggling to keep up? If you answered "yes" to these questions, join the telephone seminar sponsored by the Minnesota Home Ownership Center. Z ^ tY Minnesota t Home Ownership Center Call the seminar anytime, from 7:00 to 8:00 pm on October 15 to listen to the radio-format conversation. And you can visit with experts from the comfort and confidentiality of your own home. • Ask about options for "work out" with a lender • Hear about home owners. who benefited from speaking with a mortgage support advisor • Learn whether personal help from a mortgage support advisor is right for you. Don't wait until you've missed apayment - Join the conversation today to look out for your home, your family and your future. • For more information, visit www.hocmn.org