EDA Agenda 07-22-2015 (Special Meeting)EDA SPECIAL MEETING
Wednesday, July 22nd, 2015
4:30 p.m.
Academy Room - 505 Walnut Street, Monticello, MN
Commissioners: President Bill Demeules, Vice President Bill Tapper, Treasurer Tracy
Hinz, James Davidson, Steve Johnson and Council members Tom Perrault and Lloyd Hilgart
Staff: Executive Director Jeff O'Neill, Angela Schumann, Wayne Oberg
1. Call to Order.
2. Roll Call.
3. EDA/HRA Levy
4. Adjourn.
EDA Agenda: 07/22/15
3. EDA/HRA Levy
A. REFERENCE AND BACKGROUND
On May 26th, the EDA and Council met in a joint work session to discuss the potential of
establishing an EDA and /or HRA levy for 2016.
The EDA recommended, and the City Council approved, moving forward with a letter of
intent regarding the EDA and/or HRA levy on May 26th. At this time, the EDA is asked to
discuss the potential for EDA/HRA levy in order to form a recommendation regarding the
issue.
During the workshop special meeting, staff would propose to cover the following items:
1. Purpose of levy exploration
2. EDA and HRA levy overview
3. EDA funding priorities and budgeting expectations
4. Preliminary recommendation for EDA and /or HRA levy for 2016
B. SUPPORTING DATA
A. EDA /HRA Levy Memorandum
B. Letter to Wright County, EDA/HRA Levy
C. EDA Workplan
Offices in
Kennedy Minneapolis
& Saint Paul
Graven
St. Cloud
C H A R T E R E D
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis MN 55402
(612) 337 -9300 telephone
(612) 337 -9310 fax
www.kennedy - graven.com
Affirmative Action Equal Opportunity Employer
MEMORANDUM
TO: Board of Commissioners, Monticello Economic Development Authority
FROM: Martha Ingram, Kennedy & Graven, Chartered
CC: Tammy Omdal, Northland Securities, Inc.
DATE: March 23, 2015
RE: HRA /EDA Tax Levies
You have requested an explanation of the authority for the two types of levies available to the
City of Monticello Economic Development Authority ( "EDA "), and some historical background
on those levies. The two levies are sometimes referred to as the "HRA levy" and the `EDA
levy," described as follows.
1. HRA levy
Under Minnesota Statutes, Sections 469.091 an economic development authority has all the
powers of a housing and redevelopment authority under Sections 469.001 to 469.047 (the "HRA
Act "), unless those powers are limited by the City's enabling resolution that established the
authority. The enabling resolution that established the Monticello EDA contained no such
limitations, and in fact, in about 2008, the City acted to consolidate the functions of the EDA and
HRA and to bring all such functions under the purview of the EDA. Therefore, the EDA may
essentially act as a housing and redevelopment authority and exercise all powers under the HRA
Act, as well as exercising its economic development powers under Minnesota Statutes, Sections
469.090 to 469.1081 (the "EDA Act ").
Under Section 469.033 of the HRA Act, an HRA may levy a tax on its area of operation for the
purposes authorized under the HRA Act, subject to consent by the city council. The levy may not
exceed .0185 percent of the taxable market value in the City. The "area of operation" of the
authority is the boundaries of the City.
Since the EDA has all the powers of a housing and redevelopment authority, the EDA may levy
the tax authorized under Section 469.033, subject to the same limitations and procedures that
would apply if it were levied by a housing and redevelopment authority.
The HRA levy has two important features. First, the proceeds must be used only "for the
purposes of [the HRA Act]." Minnesota Statutes, Section 469.033, subd. 6. Those purposes,
broadly, include redevelopment to correct or prevent blight, and development of or assistance to
housing for low or moderate income persons.
457807vl MNI MN190 -101
Second, the HRA levy is technically raised by the EDA (using its HRA Act powers), albeit
approved by the City Council. The levy amount is above and beyond any levy limits that apply
to the City; the only limit is the .0185% of market value described above. As such, the HRA
levy is a reliable source of revenue independent of City revenues. As shown in Exhibit A,
attached, the maximum HRA levy authorized for 2015 in Monticello is $280,011.
2. EDA levy
Section 469.107 of the EDA Act provides separate authority for a tax levy to benefit the EDA.
Under this provision, the City levies the tax at the request of the EDA. The amount levied is limited
to .01813 percent of the taxable market value in the City (a higher levy is permissible but subject to
reverse referendum). For Monticello in 2015, the maximum authorized EDA levy is $274,410.
This levy is different from the HRA levy in two respects. First, it is made by the City for the benefit
of the EDA, at the EDA's request. The amount is within the City's overall levy limits. As such, it
is essentially the same as an appropriation to the EDA from the City's general funds. In any year in
which levy limits apply, the EDA levy would compete with general City needs. As such, the EDA
levy is not as stable, and consequently is not frequently used (at least among the cities I work with).
Second, the statute does not expressly limit the proceeds to any particular use, but the implication is
that they may be used for any activity an EDA is authorized to carry out under the EDA Act. Those
uses include housing and redevelopment activities under the HRA Act, but also broader economic
development activities. That is, the EDA levy has a slightly higher limit, and fewer restrictions on
use; however, these benefits tend to be overshadowed by the City levy limit problem described
above.
The existence of these two separate levies can be explained by the history of the EDA Act. That
statute was enacted in 1986, and was intended (by its proponents) as mechanism to consolidate
development and redevelopment powers in a single agency. However, that concept became
somewhat controversial, and the powers of economic development authorities were scaled back
during the course of the legislative session. The final result was a statute that provides some new
powers for economic development authorities, coupled with the cross - referenced powers of
housing and redevelopment authorities and cities. In practice, the cross - referenced powers have
been more beneficial.
The City could, if it chose, use both the EDA levy and the HRA levy, as long as the EDA levy is
used for purposes other than housing and redevelopment. Again, this strategy would be no
different than simply appropriating City funds to the EDA, in addition to allowing the EDA to
raise its own levy (using the HRA levy power).
3. Process
If the EDA wishes to levy an HRA levy, the steps required are fairly straightforward. First, the
EDA must prepare and file an annual budget (for its housing and redevelopment activities) in
accordance with the budget procedures of the City. The EDA must request that the City Council
approve a levy based on this budget. The City Council must review the budget and consent to
457807v1 MNI MN190 -101
the HRA levy by resolution. No public hearing is required for this process. Once adopted, the
HRA levy is included in the City's preliminary levy certification and is collected by the County
in the same manner as general City taxes, but is kept in a separate fund and turned over to the
EDA directly.
The process is basically the same if the EDA wishes to institute an EDA levy. As previously
stated, though, the EDA levy should be considered to be part of the City's general levy, rather
than a special levy independent of City revenues.
Once the EDA levy is in place, it may be increased above the statutory limit, but only if the
following requirements are met. First, the City Council must adopt a resolution stating the
proposed amount of the increase. The resolution and a notice of public hearing must then be
published for two successive weeks in the official newspaper of the City, with the first
publication taking place at least two weeks before the public hearing. After the hearing, the City
Council may (but is not required to) adopt a resolution authorizing the proposed increase or a
lesser increase. This resolution must also be published once. If a petition requesting a
referendum on the increase, signed by voters equaling at least 5 percent of the votes cast in the
most recent general election, is filed with the City Clerk within 30 days of publication, the
resolution will not become effective and an election on the increase will be required.
4. Calculation of City Taxes Attributable to Decertified TIF Districts
You also requested information on the amount of taxes that will be available to the City upon
decertification of various tax increment financing ( "TIF ") districts that are nearing the end of
their statutory terms. As shown in Exhibit A, there are three TIF districts that will be decertified
in the near future: TIF District No. 36 (decertified by end of 2015), TIF District No. 37
(decertified by end of 2015), and TIF District No. 38 (decertified by end of 2017). Upon
decertification of these TIF districts, property taxes currently paid over to the City as tax
increment from parcels within the TIF districts will instead be distributed by Wright County to
the normal taxing jurisdictions, resulting in an increase in tax revenues available for general City
purposes. The estimated additional city taxes that will become available as a result of
decertifying TIF District No. 36 and TIF District No. 37 at the end of 2015 is $32,028. The
additional amount available at the end of 2017 will be approximately $4,887. In total, the annual
amount of property tax going to the City's general fund after the end of 2017 is approximately
$37,000.
If you have further questions on these points, please let me know.
457807v1 MNI MN190 -101
0
z_
z
0
0
City of Monticello
Monticello Economic Development Authority
Estimated Property Tax Levy Scenarios for Monticello Economic Development Authority ;
Maximum
Total City Total
Taxable Markel: Maximum EDA Maximum EDA Maximum HRA (Maximum HRA EDA /HRA
Value Pav ° Tax Rate Tax Levv Tax Rate Tax Levv Tax Levv
Calculation of Maximum Total EDA /HRA Tax Levy:
All Taxable Parcels within the City of Monticello $1,513,570,400 0.01813 906 274,410 0.0185% $280,011 $554,421
Notes
1 After TIF District 38 is decertied at the end of 2017, the next district decertification is not projected until the end of 2022.
Z Based on Pay 2015.
3 Pursuant to Minnesota Statute 469.091(HRA levy) and 469.107 (EDA Levy).
Based on Pay 2015 as provided by Wright County on 3/20/2015
3/20/2015
KCiR I III. \ND0SECURITIES
i
Estimated
Taxable Markel: Estimated Tax
Value Z Capacity
City Tax Rate Z
Estimated City
Taxes Payable
from Parcels
within TIF
Districts Z
Calculation of Estimated City Taxes; Payable from Parcels within TIF Districts:
TIF Districts to be Decertified at En of Year 2015:
TIF District 36 Parcels
$3,201,000
$63,270
35.7370%
$22,611
TIF District 37 Parcels
$1,355,100
$26,352
35.7370%
$9,417
TOTAL
$4,556,100
$89,622
35.7370%
$32,028
TIF District to be Decertified at End of Year 2017: 1
TIF District 38 Parcels
$721,200
$13,674
35.7370%
$4,887
Notes
1 After TIF District 38 is decertied at the end of 2017, the next district decertification is not projected until the end of 2022.
Z Based on Pay 2015.
3 Pursuant to Minnesota Statute 469.091(HRA levy) and 469.107 (EDA Levy).
Based on Pay 2015 as provided by Wright County on 3/20/2015
3/20/2015
KCiR I III. \ND0SECURITIES
i
Monticello
June 9, 2015 Y
Robert Hiivala
Wright County Auditor - Treasurer
10 2 °d Street NW
Buffalo, MN 55313
RE: City of Monticello EDA/HRA Tax Levy
Dear Mr. Hiivala:
PHONE: 763-295-2711 FAx:763- 295 -4404
505 Walnut Street Suite 1 '1 Monticello, MN 55362
By this letter, I am notifying you, in accordance with Minnesota Statutes, Section 275.067, that the
City of Monticello Economic Development Authority (the "EDA ") intends to operate as a special
taxing district and is considering certification of a levy for taxes collected in 2016.
The EDA currently exists, having been formed by an enabling resolution of the City Council on
March 25, 2013 (amending, restating, and superceding in all respects Ordinance No. 172, approved
April 10, 1989, as amended). Under the enabling resolution, the EDA's bylaws and Minnesota
Statutes, Sections 469.090 to 469.1082 (the "EDA Act"), the City may impose a levy under
Minnesota Statutes, Section 469.107 for the benefit of the EDA (the "EDA Levy "). In addition, the
EDA has all the powers of a housing and redevelopment authority under Minnesota Statutes,
Sections 469.001 to 469.047 (the "HRA Act "). One of those powers is the power to levy a special
benefit tax under Section 469.033, subd. 6 (the "HRA Levy").
The EDA is now considering the imposition of the EDA Levy and the HRA Levy in accordance
with the EDA Act and HRA Act, beginning with a levy for taxes collected in 2016. We understand
that the maximum EDA Levy under current law is 0.01813% of taxable market value in the City,
and that the maximum HRA Levy under current law is 0.0185% of taxable market value in the City.
The entire area of the City constitutes the "special taxing district" against which the levy will be
spread. As required by Minnesota Statutes, Section 275.067, attached is a map showing the
boundaries of the district which includes all tax parcels in the City. In addition, a complete list of
the tax parcels in the special taxing district, which is the entire area of the City, is available upon
request.
The EDA and City will approve and submit the EDA Levy and HRA Levy to your office in
accordance with the EDA Act, the HRA Act, and Minnesota Statutes, Chapter 275. The EDA may
determine not to raise a levy (or to raise only a portion of the maximum permitted) in any particular
year.
If you have any questions, please let me know.
Sincerely,
Je rey O'Neill
City Administrator
www.ci.monticello.mn.us
EDA ANNUAL WORK PLAN
EDA Purpose:
The EDA is charged with coordinating and administering the City of Monticello's economic
development and redevelopment plans and programs. The EDA is also responsible for housing
and housing redevelopment.
EDA Work Plan Mission Statement:
The EDA's 2015 work plan is adopted in support of achieving the goals of the Monticello
Comprehensive Plan. The EDA will be proactive by developing and undertaking actions for
achievement of the Comprehensive Plan's Economic Development goals and will be reactive in
responding to economic development opportunities as they arise in the most timely and effective
manner possible. The EDA shall utilize the economic development strategies of the
Comprehensive Plan as a guide for action.
Comprehensive Plan Goals:
Attracting & Retaining Jobs
Expanding Tax Base
Enhancing Downtown
Facilitating Redevelopment
Housing Choice for Life -Cycle
2015 Action Statements:
1. Research for implementation the adoption of a 2016 EDA (and /or HRA) levy.
2. Research for implementation the use of tax abatement by the City of Monticello,
including specific use criteria.
3. Clearly understand allowable uses of available pooled housing increment as a financial
resource.
4. Continue to support redevelopment efforts for publicly -owned properties on Block 34.
5. Engage as a partner in other redevelopment opportunities as they arise, actively
encouraging redevelopment within the TH25 /CSAH 75 area.
6. Market industrial development at the Monticello Business Center (Otter Creek Business
Park), targeting businesses which will be a supplier, customer or collaborative partner to
existing businesses within the community.
7. Encourage more proactive lead development and response in all market segments to
support a diversified tax base.
8. Develop and re- establish a dedicated economic development staff position to facilitate
and support the accomplishment of Comprehensive Plan goals.
9. Market EDA incentive programs in a more proactive manner, both within the community
and beyond, beginning with the education on these resources at the EDA level.
10. Actively market for sale for development the EDA -owned properties at Cedar Street, 349
West Broadway and 413 W. 4th Street.
11. Examine housing stock for aging or blighted properties and research development of
programs for redevelopment and/or revitalization.
12. Support the development of the Destination for Innovation brand and implement in
economic development activities.
Appendix: Monticello Comprehensive Plan, Chapter 5 - Economic Development
2