072400 EDAOfficial File Copy
CITY OF NEW HOPE
EDA MEETING
City Hall, 4401 Xylon Avenue North
July 24, 2000
President W. Peter Enck
Commissioner Sharon Cassen
Commissioner Don Collier
Commissioner Pat LaVine Norby
Commissioner Mark Thompson
2.
3.
4.
Call to Order
Roll Call
Approval of Regular Meeting Minutes of June 26, 2000
Discussion Regarding Request for Tax Increment Financing Assistance for Avtec
Building Expansion and Regional Stormwater Pond Improvements, 9101 Science Center
Drive (Planning Case No. 00-11)
Resolution Establishing a Business Subsidy Criteria Pursuant to Minn. Stat. 116J.993-
116J.995
6. Adjournment
Approved EDA Minutes
Regular Meeting
CALL TO ORDER
ROLL CALL
APPROVE MINUTES
PUBLIC HEARING
Item 4
CLOSE HEARING
Item 4
ADJOURNMENT
New Hope EDA
Page 1
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
June 26, 2000
City Hall
President Enck called the meeting of the Economic Development Authority to order
at 7:06 p.m.
Present:
W. Peter Enck, President
Sharon Cassen, Commissioner
Don Collier, Commissioner
Pat LaVine Norby, Commissioner
Mark Thompson, Commissioner
Motion was made by Commissioner Norby, seconded by Commissioner Collier, to
approve the Regular Meeting Minutes of May 22, 2000. All present voted in
favor. Motion carried.
President Enck introduced for discussion Item 4, Public Hearing: Resolution
Adopting Business Subsidy Criteria.
Mr. Dan Donahue, City Manager, explained that state law requires a public hearing
to receive public input from interested parties. He noted the City has had guidelines
in place for several years but to comply with state law, it is necessary that the City
adopt a policy. The objective of the policy is to attract and enhance commercial and
industrial development thereby increasing employment opportunities for New Hope
residents and developing the job base and tax base of the City. The subsidy could be
any type of financial gain to the business. The subsidy is defined as a grant,
contribution of personal or real property, infrastructure, the principal amount of a
loan at rates below those commercially available, a reduction of deferral or any tax
or fee, any guarantee of payment or any preferential use of government facilities
given to a business. The policy would be used for business subsidies that equal or
exceed $25,000. Mr. Donahue commented that there are no projects currently under
consideration.
There was no one present in the audience to address the EDA at the public hearing.
Mr. Donahue recommended postponing action adopting the criteria until after
further discussion at a future work session.
Motion was made by Commissioner Cassen, seconded by Councilmember Norby,
to close the public hearing and postpone action until June 27, 2000 Work
Session. All present voted in favor. Motion carried.
Motion was made by Commissioner Norby, seconded by Commissioner Thompson,
to adjourn the meeting. All present voted in favor. Motion carried. The New Hope
EDA adjourned at 7:12 p.m.
Respectfully submitted,
:,
Valerie Leone
City Clerk
June 26, 2000
EDA
R] ( UF_,ST FOR ACTION
~- Approved for Agenda Agenda Section
Originating Department EDA
Community Development ~ July 24, 2000 Item No.
7
By: Kirk McDonald BY: ~
DISCUSSION REGARDING REQUEST FOR TAX INCREMENT FINANCING ASSISTANCE FOR AVTEC BUILDING
EXPANSION AND REGIONAL STORMWATER POND IMPROVEMENTS, 9101 SCIENCE CENTER DRIVE (PLANNING
CASE 00-11 )
REQUESTED ACTION
The City has received the attached proposal/request from VVilson Development Services, on behalf of Avtec Finishing
Systems, Inc., 9101 Science Center Drive, requesting that the City consider tax increment financing assistance to facilitate
extraordinary development costs with a building expansion project and to facilitate the construction of a regional storm
water pond and trail improvements in Science Industry Center. Staff requests to review the proposal with the EDA to
determine if the EDA has an interest in staff pursuing this request with the developer.
POLICY/PAST PRACTICE
The City considers requests for financial assistance for business expansions when written proposals are submitted to the
City. The City has not created any new Tax Increment Financing districts for the past 10+ years due to the restrictions that
are imposed on cities by the state for creating new districts. Staff does find that this request may merit special
consideration due to the regional storm water quality issues that could be constructed in conjunction with this development.
BACKGROUND
Avtec Finishing Systems, Inc. is a metal finishing business that has been located at 9101 Science Center Drive since
1981. The company employs 120 employees over three shifts. The existing building is 36,000 square feet in size and the
company is proposing to construct an 18,000 square foot addition on the front (north side) of the building. The soils in this
area are marginal and will require some correction and the' building will require spread footings. It is anticipated that the
expansion will add from 5 to 25 additional employees to the business.
Avtec has been proceeding through the development review process during June and July with City staff, consultants, and
committee review and the Planning Commission recommended approval of their expansion plans at the July 11 Planning
Commission meeting. The expansion plans will be considered by the Council at the July 24 Council meeting.
One of the major issues discussed during the development review process was storm water quality improvements.
Avtec's property includes a triangular-shaped piece of property southeast of the existing building and east of the rail spur.
The building expansion requires storm water ponding improvements to meet the property owner's current expansion plans
and the plans denote a pond in the area which has been approved by the City Engineer and Watershed District. However
MOTION BY SECOND BY
I:RFA\ Q-pc 00-11 Avtec TIF request
Request for Action
Project 00-11 Avtec TIF Request
July 24, 2000
Page 2
the City Engineer has discussed the need for a larger regional pond in this area that would address water quality issues
from adjacent and surrounding properties with expansions in the future (see Engineer's sketches). There has been some
discussion of having Avtec place funds in escrow and deferring their ponding improvements to allow time for the City to
coordinate with other properties in the area on regional pond issues, with the City potentially acquiring the property for
ponding purposes. The Watershed District favors the regional pond approach and the Planning Commission
recommended that the Council consider improvements on a regional basis. The City's trail plan also shows a future trail
connection through this site.
Based on the above-stated information, Avtec is requesting that the City consider creating an Economic Development Tax
Increment Financing District to assist them with extraordinary development costs and to assist the City with the future
construction with a regional NURP pond including property acquisition and trail access. It is estimated that the proposed
building expansion would generate between $150,000 and $185,000 in TIF funds over the next eight years (after the 40%
fiscal disparity allocation is paid). The TIF statutes also provide for a loss in local government aid and require that the City
participate in the project by making a 10% annual contribution. If the City proceeded with this project, it is anticipated that
the 10% would be contributed from the Storm Water Fund or other non-general fund tax sources used for pond and trail
improvements. Artec is requesting that they be paid $125,000 of the TIF proceeds for a portion of the TIF eligible
expenses and sale of land (for the pond) to the City under a "pay,as-you-go" arrangement. The additional $25,000 -
$50,000 in TIF generated funds would be available to the City for administrative expenses and public improvements
associated with the project.
If the EDA is interested in pursuing this request, the first step would be for the EDA to direct staff to coordinate with the
developers on the preparation of a TIF Plan and Development Agreement. The City Manager is recommending that the
City utilize one of its financial consultants to assist City staff in coordinating with the developers on this request. The
applicant has provided a proposed TIF Approval Process Schedule in their attached proposal.
ATTACHMENTS
TIF Proposal
City Engineer Correspondence and Sketches
hRFA\ Q-pc 00-11 Avtec TIF request
WILSON DEVELOPMENT SERVICES
"HELPING CITIES AND BUSINESSES GROW"
July 17, 2000
Kirk McDonald
Community Development Director
4401 Xylon Avenue N
New Hope, MN 55428-4898
RE:
AVTEC Expansion Project
TIF & NURP Pond
Dear Mr. McDonald:
I am wdting as a follow up to our meeting of July 14, 2000, at which time I met with Mr. Watts
and yourself to discuss the City's interest in a regional NURP Pond and AVTEC's request for
tax increment financing assistance.
Background
It became evident in the Design & Review meeting and subsequent Planning Commission
meeting that the City of New Hope is very conscious how storm water matters are addressed.
It was also apparent that staff have given considerable thought to a regional or area approach
to storm water run off problems in the vicinity of the AVTEC property.
The City also has interest in a trail easement across the property.
We have engaged in discussions and eventual recommendation from the Planning
Commission that AVTEC delay construction of its NURP Pond until next year, so that
additional time would permit the study of a potential larger area pond. A regional pond would
require the City gaining control of the site presumably through acquisition.
At issue is a portion of the AVTEC site east of the existing railroad spur. It is approximately .5
acres in size.
At the same time, AVTEC is experiencing extraordinary development costs due to unstable
soil conditions and configuration as well as the construction of a NURP pond.
Proposal
We are requesting that the City consider the use of tax increment financing to facilitate the
construction of a regional NURP Pond and obtain the trail access, while assisting AVTEC with
its extraordinary development costs.
510 Chestnut Street, Suite 200 · Chaska, MN 55318
Office: (952) 448-4630 ° Fax: (952) 448-4676
Email: wilsondev@earthlink.net
The proposed building expansion will generate approximately $150,000 to $185,000 in TIF
funds over 8 years. Exhibit A calculates the potential real estate tax on the property. The
resulting tax rate of $2.42 per square foot appears high when compared to existing tax rates.
Hence, for this discussion, I have used a range of $2.00 to $2.48 per square foot.
Exhibit B demonstrates how the gross tax results in a net TIF. The TIF statutes now require
that the fiscal disparity allocation be paid directly before the TIF is calculated. Hence, 40% of
the gross tax is lost to the fiscal disparity pool.
The TIF statutes also provide for a loss in local govemment aids and homestead credits or
require that the City participate in the project by making a 10% annual contribution. The 10%
annual contribution can be dollars that the City were going to expend anyway for public
improvements (i.e., ponds and trails).
We are suggesting that an Economic Development District be established that would provide
8 years of TIF collection. The first year would only be a partial collection due to only a partially
built building being taxed.
AVTEC is requesting that it be paid $125,000 over the 8 year TIF collection for a portion of its
TIF eligible expenses and sale of land to the City. This would be a "pay-as-you-go" project,
where TIF is only paid if the building is actually built and real estate taxes are paid in a timely
way. The City would build the NURP ponds.
There would be an additional $25,000 to $50,000 available to the City for administrative
expenses and public improvements.
Timing
Timing is a critical factor for AVTEC. The original goal was to start construction by August
15th. That date is driven by two factors. First, the additional space is needed for production
that will satisfy PCA requirements. AVTEC needs to demonstrate its ability to meet new
requirements. Second, we are trying to avoid the additional cost of winter construction,
estimated at $50,000.
TIF is typically a 45-60 day process. The following schedule coincides with the City Council's
scheduled meeting dates. This is the fastest that a project could be put together and meet the
statutory requirements.
DATE
7-24
8-12
8-14
9-5
9-11
9-12
9-13
TIF APPROVAL PROCESS
ACTION
City Council direct TIF Plan & Development Agreement preparation
Draft TIF Plan & economic impact to County & School (30 Day Requirement)
City Council review TIF Plan and call public hearing
Planning Commission review
City Council hold public hearing; create TIF District; approve Development
Agreement
Certify TIF District with County
Issue Building Permit
I will be on vacation beginning Tuesday thru FddaY. I Will be available to further discuss this
proposal with you on Monday, July 24th. I am planning on attending the July 24, 2000 City
Council meeting.
Daniel Iq. Wilson
Development Consultant
for ARTEC
cc: Kirk Lindgren, AVTEC
EXHIBIT A
POTENTIAL REAL ESTATE TAX CALCULATION
ARTEC EXPANSION 16,730 SQ. FT.
$1,075,588
982,895
95%
933,750
.035
32,681
1.268
41,439
2.48
Gross Construction
Construction Without Fees
Sales Market Ratio
Assessor's Additional Market Value
Ind. Tax Class Rate
Tax Capacity
Local Tax Rate
Tax on New Construction
Tax Per Sq. Ft.
TIF ELIGIBLE EXPENSES
Earth Work & NURP Pond
Storm Water Drainage Pipe
Site Concrete
SAC WAC
Building Permit
Soil Engineer & Civil Engineer
$104,835
29,000
20.500
154,355
7,2O0
9,275
10.000
$180,830
EXHIBIT B
AVTEC
16,730 SQ. FOOT ADDITION
TIF CASH FLOW ESTIMATE
TAX RANGE TAX @ 2.00/SQ. FT.
YEAR TAXABLE/ PAYABLE BUILDING 40% FISCAL NEi TIF LOCAL CITY
ADDITION DISPARITY CONTRIBUTION @
TAX 10%
2000 2001
1 1 2 16,730 6,692 10,038 1,004
2 2 3 33,460 13,384 20,076 2,008
3 3 4 33,460 13,384 20,076 2,008
4 4 5 33,460 13,384 20,076 2,008
5 5 6 33,460 13,384 20,076 2,008
6 6 7 33,460 13,384 20,076 2,008
7 7 8 33,460 13,384 20,076 2,008
8 8 9 33.460 13.384 20.076 2.008
SUBTOTAL 250,950 100,380 150,570 15,060
TAX RANGE TAX @ 2.48/SQ. FT.
YEAR TAXABLE/ PAYABLE BUILDING 40% FISCAL NET TIF LOCAL CITY
ADDITION DISPARITY CONTRIBUTION @
TAX 10%
2000 2001
1 1 2 20,719 8,287 12,432 1,243
2 2 3 41,439 16,576 24,863 2,486
3 3 4 41,439 16,576 24,863 2,486
4 4 5 41,439 16,576 24,863 2,486
5 5 6 41,439 16,576 24,863 2,486
6 6 7 41,439 16,576 24,863 2,486
7 7 8 41,439 16,576 24,863 2,486
8 8 9 41.439 16.576 24.863 2,486
SUBTOTAL 310,792 124,319 186,473 18,645
Bonestroo
Rosene
Anderlik &
Associates
Engineers & Architects
BonLS~[~d~, Anclerlik and Associates, Inc. is an Affirmative Action/E~lual Opportun~t)-
Employer and Employee Owned
Principals: Otto G, Bc~estroo, RE · Marvin L Sorvala, PE · Glenn R Cool<, PE ·
Robert G. Schunlcht, RE . .Jerry A Bourdon. RE
Senior Consultants: Robert W Rosene RE · Joseph C. Anderhk RE · R~chard £ Turne' rte
Susan M. E~erhn, C.PA
Associate Principals: Howard A. Sanford. PE · Kettl~ A Gordon, P.E · Robert R Pfefferle. PE
Richard W. Foster. RE. · David O. Loskota, RE. · RoDert C. Russek, A.IA · Mark A Hanson.
Michael T. Rautmann, RE. · Ted K.Field, RE · Kenneth ~ Anderson. F~E · Mark R Rolts RE ·
David A. Bonestroo. M.B.A · Sidney P: WlIBamson. RE., LS · Agnes M Ring, MS A · Allan Rick
Offices; St, Paul. St. Cloud, Rochester and Willmar, MN · Milwaukee. ~
~l['~e bsit e: www. bonestroo.com
To:
From:
Subject:
Date:
Kirk McDonald
Vince Vander Top, Mark Hanson
Avtec Finishing Systems
Our File No. 34-GEN E98-26
June 29, 2000
The following comments are based on the plan set received June 26, as well as previous
submittals.
Grading and Drainage
All site drainage from existing hard surface and proposed hard surface is' directed to the
SE portion of the property. It is collected via storm sewers and culverts and will be
treated in a proposed storm water pond east of the RR spur. Drainage calculations were
submitted previously. The proposed storm water collection and treatment prior to leaving
the site appears to be consistent with Shingle Creek Watershed and City requirements.
It is recommended that the proposed improvements be reviewed by Shingle Creek
Watershed.
B612 curb and gutter will be constructed along the east and south sides of the property.
This will improve storm water collection and control.
The proposed curb on the south side of the property has been configured to maximize
space for truck maneuvering near the loading dock. The configuration also appears to
account for the slope of the RR spur embankment.
The existing 18-inch RCP storm pipe on the south side of the property will be extended to
the west lot line. The imProvements account for drainage from adjacent properties. This
storm sewer could be extended to the west by others in the future.
An existing 12" culvert below the RR spur will remain; although the drainage area served
will be reduced. The swale upstream of the 12" culvert must be bermed to maximize the
water directed to the proposed pond.
2335 West Highway 36 · St. Paul, MN 55113 · 651-636-4&00 · Fax: 651-636-1311
Other Items
All permits required to construct a culvert below the RR spur must be obtained by the
property owner. A copy of the permit should be provided to the City prior to
construction.
A bond in the amount of 150% of the site improvements should be issued prior to
construction.
A new drainage easement is shown over the proposed pond. The north easement line
should be moved 15 feet further north. The proposed I-BVL is 895.5+. The easement
must include all areas within the HWL plus an additional buffer strip. Moving the north
easement line 15 feet will include the proposed 896 contour.
Future Improvements
10. City staff has discussed the potential of future improvements including:
· Additional storm water ponding for water quality treatement for other properties
within the subwatershed.
· A regional pedestrian/biking trail including a crossing of the RR.
A sketch of existing easements and possible future improvements has been provided
previously.
These future improvements would require coordination between the City and adjacent
property owners. The City may consider delaying the proposed Avtec ponding
improvements to allow time for the evaluation of other regional improvements. Pending
the results of the evaluation, Artec and/or the City could construct the selected
improvements. It is recommended that the bond for the proposed ponding improvements
be maintained during the evaluation.
It is recommended that staff, Planning Commission, and Council discuss the feasibility of
future improvements.
End of Comments
Bonestroo
Rosene
Anderlik &
Associates
Engineers & Architects
Emplovrr and Employee Owne"'
SuS,~r~ ~' EDer,r' C PA
To: Kirk McDonald
cc:
Doug Sandstad, Guy Johnson, Shari French, Alan Brixius
From:
Vince Vander Top, Mark Hanson
Subject:
Avtec Finishing Systems
Our File No. 34-GEN E98-26
Date: June 15, 2000
We have completed the attached sketches relating to the ponding area on the Avtec property.
This is the southeast portion of the Avtec property. The sketches are based on review comments
from staff during recent meetings and include the concept of regional storm water ponds and a
future trail.
The sketches include four Figures:
Figure 1 depicts the property line between Avtec, th6 property to the east, and the RR.
Figure 2 includes all easements in the area based on information submitted by the applicant
and other info in our office.
Figure 3 represents the area if Artec would construct the improvements as proposed in the
submittal.
Figure 4 represents the area if regional ponding and trail improvements are constructed.
As we discussed, the construction of regional ponds and the dedication of trail easements would
require coordination with the property owners an'd the City. City staff, the Planning
Commission, and City Council should discuss the potential of these improvements further.
2335 ~[/est Highway 36., St. Paul, MN 55113 · 651-636-4600 · Fax: 651-636-1311
/
00'4 '13" E '
/
0
EDA
FOR ACTION
REQUEST
Originating Department Approved for Agenda Agenda Section
Community Development July 24, 2000 EDA
Item No.
B~': Kirk McDonald B~r: 5
RESOLUTION ESTABLISHING A BUSINESS ~UBSIDY CRITERIA PURSUANT TO MINN. STAT. 116J.993- 116J.995
REQUESTED ACTION
Staff recommends that the EDA approve the enclosed Resolution Establishing a Business Subsidy Cdteda, which adopts
the City of New Hope Policy for business subsidies.
POLICY/PAST PRACTICE
The State of Minnesota has recently required all municipalities to adopt policies regarding business subsidies.
BACKGROUND
A public hearing was held on this issue at both the City Council and EDA meetings on June 26. The public hearings were
closed at said meetings and the consideration of the policy was referred to a City Council Workshop. The City Council
directed staff to bring back a revised policy for consideration at the July 24 Council Meeting. Attached to the enclosed
resolutions are the revised policies that have been prepared by the City Attorney.
Per the City Attorney's correspondence, the criteria has changed from the document which was previously provided.
Specifically, the enclosed policy now sets forth expressed wage goals in connection with a provided subsidy. Said
specific wage goals resulted from a legislative amendment occurring in the 2000 session. Apparently, cities were
adopting policies permitting them to establish wage and job goals on a case by case basis. The legislature apparently
disliked that practice and required specific goals to be set forth in the policy. The City can deviate from those goals,
however, any deviation must be accompanied by a written resolution making finds for the deviation.
The enclosed policy sets a wage goal for New Hope that would require the creation of retention of at least one job paying
a living wage for every $50,000 of assistance provided. This basically means a job which pays at least $10 per hour or
approximately $20,000 annually based on federal poverty level definitions. The Council and EDA are free to raise or
lower that number as they see fit and they can also use a specific hourly wage number and do not have to base it on a
formula using the federal poverty level. The Council and EDA are free to discuss the specific criteria or change or amend
it in any fashion they see fit. The only requirement is that the City has in the policy a specific wage and job goal if the
creation or retention of jobs are the public purpose for the subsidy.
· o:
Request for Action
Page 2
07/24/00
The legislature also amended and broadened the number of exceptions that will preclude the application of the enclosed
policy. Those new exceptions are set forth in numbers 18 through 22 of the exceptions to criteria. Further, number 5 was
broadened to include designated historic preservation districts, number 8 was amended to specifically include hazardous
substance tax increment financing subdistricts and number 14 was amended to include refunding bond issues and bonds'
sold for the benefit of 501 (c)(3) organizations.
The resolution states:
1. That each business subsidy will be evaluated pursuant to the criteria in the policy.
2. That the City will determine job and wage goals for each business subsidy which goals will be sensitive to prevailing
wage rates, local market and economic conditions, economic and market forces over which neither the community or
developer have control, the financial resources of the developer and the competitive environment of the market.
However, the minimum wage and job goals of the attached criteria must be met per the terms of the criteria.
3. That any deviation from the attached criteria will be based on written findings set forth in a resolution explaining the
reason for any deviation from the criteria.
Staff recommends approval of the resolution.
ATTACHMENTS
Resolution
· Policy for Business Subsidies
· City Attorney Correspondence
CITY OF NEW HOPE
EDA RESOLUTION NO.2000-
RESOLUTION ESTABLISHING A
BUSINESS SUBSIDY CRITERIA PURSUANT
TO MINN. STAT. §§ 116J.993 - 116J.995
BE IT RESOLVED by the Board of Commissioners of the Economic Development
Authority in and for the City of New Hope as follows:
WHEREAS, the City of New Hope is a fully developed community and pursues
redevelopment as a way to maintain and increase tax base, create new or retain present job
opportunities, remove blighted structures and maximize underutilized sites; and
WHEREAS, the State of Minnesota requires local governments to adopt business subsidy
policies as specified in Minnesota Statutes, Sections 116J.993 through 116J.995; and
WHEREAS, Minnesota Statutes 116J.993, Subdivision 3 def'mes business subsidy as "...
local government agency grant, contribution of personal property, real property, infrastructure,
the principal amount of a loan at rates below those commercially available to the recipient, any
reduction or deferral of any tax or any fee, any guarantee of any payment under any loan, lease,
or other obligation, or any preferential use of governmental facilities given to a business", subject
to various exceptions; and
WHEREAS, the Economic Development Authority in and for the City of New Hope
recognizes that it undertakes redevelopment projects to achieve public purposes, including the
creation or retention of new jobs that pay living wages; and
WHEREAS, the Economic Development Authority in and for the City of New Hope also
recognizes that job creation may not be a primary purpose for some redevelopment projects which
are intended to eliminate blight, increase community vitality and serve broad public purposes.
NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in
and for the City of New Hope as follows:
1. That each business subsidy will be evaluated pursuant to the criteria attached hereto
as Exhibit A.
2. That the City will determine job and wage goals for each business subsidy which
goals will be sensitive to prevailing wage rates, local market and economic conditions, economic
and market forces over which neither the community or developer have control, the financial
-1-
resources of the developer and the competitive environment of the market. However, the
minimum wage and job goals of the attached criteria must be met per the terms of the criteria.
3. That any deviation from the attached criteria will be based on written findings set
forth in a resolution explaining the reason for any deviation from the criteria.
Dated the 24th day of July, 2000.
W. Peter Enck, President
Attest:
Daniel J. Donahue, Executive Director
P:\Attorney~Cnh Rgsolutions~Po:so Est Bnsin~ Sub'dy Criteria - EDA.w~I
-2-
EXHIBIT A
CITY OF NEW HOPE
POLICY FOR BUSINESS SUBSIDIES
Purpose: The purpose of this policy is to set guidelines that would enable the City of New Hope
to comply with Minnesota Statutes 116J.93, et seq.
Objective: The objective of the City of New Hope is to attract and enhance commercial and
industrial development hereby increasing or retaining employment opportunities for New Hope
residents and developing the job base and tax base of the City.
Definitions:
A. Business Subsidy. A business subsidy means a state or local government agency
grant, contribution of personal property, real property, infrastructure, the principal amount
of a loan at rates below those commercially available to the recipient, any reduction or
deferral of any tax or fee, any guarantee of any payment under any loan, lease, or other
obligation, or any preferential use of government facilities given to a business.
Comprehensive Health Insurance is de£med as:
· Employer 100% premium payment for individual coverage or 80%
premium payment for family coverage;
· Employer minimum payment of 80% for office visits, emergency care,
surgery and prescriptions;
· A maximum yearly deduction of $1,000; and
· Maternity coverage.
C. Living Wage will be def'med as 125 % of the federal poverty level for a family of
four. Businesses that provide employer-paid comprehensive health insurance may pay a
living wage as defined at 110% of the federal poverty level for a family of four.
D. Responsible Labor Relations are defined as neutrality on union organizing,
providing a complete and accurate list of names and addresses of employees, reasonable
access to employees and facilities during non-working periods, voluntary recognition based
on a card check demonstrating that a union represents a majority of employees in a
bargaining unit, and binding arbitration on the first contract.
-3-
Procedure: This policy will be used for business subsidies that equal or exceed $25,000. In the
event a subsidy is in excess of $100,000, the determination shall be preceded by a public hearing.
A proposed subsidy shall be considered to offset land costs, site development, building costs and
design specifications that exceed the City's maximum requirements.
Minimum Requirements: A recipient of a business subsidy must meet the follOwing minimum
requirements. Any deviation from these minimum requirements shall be documented in a written
resolution setting forth the reasons for the deviation. A certified copy of said resolution shall be
attached to the next DTED annual report. The City shall evaluate each request for a business
subsidy based on the best interests of the City and its residents. In determining whether to
approve a subsidy, the City shall consider facts it deems appropriate, which shall include the
following:
A business subsidy must have a defined public purpose which may include, but not be
limited to, increasing the tax base of the City. Job retention may also be a valid public
purpose if the job loss is specific and demonstrable.
Proposals for direct loans must be unable to obtain full private financing before applying
for city funding.
Loan guarantees must have participation by a private lender to assume at least 50 % of the
risk.
Business subsidies in the form of grants must be structured as forgivable loans. For other
types of subsidies, the agreement must state the fair market value of the subsidy to the
business, including the value of conveying property at less than a fair market price, or
other in-kind benefits to the business.
A business must set goals to be achieved within two years for the number of jobs that they
will create (or retain when job loss is specific and demonstrable) and the wages that these
jobs will pay. Businesses must create (or retain) one full-time living wage job per $50,000
of assistance. Jobs will only be considered created if they are in addition to the highest
number of employees that the business has had in the 18 months prior to receiving the
subsidy.
A business must have a goal for the percentage of new jobs that will be held by City
residents.
After a public hearing, if the creation or retention of jobs is determined not to be a goal,
the wage and job goals may be set at zero.
The commitment of the proposed development to continue operations at the site where the
subsidy is used for at least five years after the benefit date.
The ability of the proposed development to fulfill or provide a desired amenity, facility or
service that is not provided by the City.
10.
The business must disclose any potential adverse impact on the environment that could
result from this project.
Exceptions to Criteria: Consistent with Minnesota Statutes 116J.993, Subdivision 3, the following
forms of financial assistance are not a business subsidy, and recipients will not typically be
required to meet the criteria for business subsidies set forth in this policy statement:
1. Business subsidy of less than $25,000;
2. Assistance that is generally available to all businesses or to a general class of similar
business, such as a line of business, size, location, or similar general criteria;
3. Public improvements to buildings or lands owned by the state or local government that
serve a public purpose and do not principally benefit a single business or defined group of
businesses at the time the improvements are made;
4. Redevelopment property polluted by contaminants as defined in Minnesota Statutes,
Section 116J.552, Subdivision 3;
5. Assistance for designated historic preservation districts or assistance provided for the sole
purpose of renovating old or decaying building stock or bringing it up to code, provided
that the assistance is equal to or less than 50 percent of the total cost;
6. Assistance to provide job readiness and training services if the sole purpose of the
assistance is to provide those services;
7. Assistance for housing;
8. Assistance for pollution control or abatement, including a hazardous substance tax
increment financing subdistrict as def'med in Minn. Stat. § 469.174(23);
9. Assistance for energy conservation;
10. Tax reductions resulting from conformity with federal tax law;
11. Worker's compensation and unemployment compensation;
12. Benefits derived from regulation;
13. Indirect benefits derived from assistance to educational institutions;
14. Funds from bonds allocated under Minnesota Statutes, Chapter 474A, bonds issued to
refund outstanding bonds and bonds issued for the benefit of an organization described in
section 501(c)(3) of the Internal Revenue Code of 1986, as amended;
15. Assistance for a collaboration between a Minnesota higher education institution and a
business;
16. Assistance for a tax increment financing soils condition district as def'med under Minnesota
Statutes, Section 469.174, Subdivision 19;
17. Redevelopment when the recipient's investment in the purchase of the site and in site
preparation is 70 percent or more of the assessor's current year's estimated market value;
-5-
18.
19.
20.
21.
22.
23.
General changes in tax increment financing law and other generated tax law changes of a
principally technical nature;
Federal assistance until the assistance has been repaid to, and reinvested by, the state or
local government agency;
Funds from dock and wharf bonds issued by a seaway port authority;
Business loans and loan guarantees of $75,000 or less;
Federal loan funds provided through the United States Department of Commerce,
Economic Development Administration; and
Any other forms of assistance that may be defined by law as not constituting a business
subsidy under Minnesota Statutes, Section 116J.993, Subdivision 3.
Preferences: All other things being equal and to the extent legally possible, preference will be
given to applicants meeting the following criteria:
2.
3.
4.
Businesses that contribute to employee child care and retirement accounts;
Businesses that are locally owned;
Businesses that engage in responsible labor relations;
Businesses that have a goal that 25 % or more of the new jobs will be held by City
residents;
Businesses that have traditionally paid living wages.
p:\Attorney\Cnh Resolutiom\Reso Est B~ine~ Subsidy Criteria - EDA.wpd
-6-
07/18/00 11:14 FAX 7634935193 JENSEN & SONDRALL, PA
W~JAM ¢o STaAr~
C. ALDI~ PP. ARSON~'
SUI~ A. THILL
01~ COUNSl~L
~ Q. BRYNESrAD
JENSEN & SONDRALL, P.A.
Attorneys At Law
~25 EDINBROOK CROSSINC~ STE. 201
BROOKLYN PARI~ i¥[INNESOTA 55443-1968
TgLg~l~O~ (763) 424-8811 · TgLr~A,X (763) 493-5193
e-mnil lnw(!/lJ ensen-sondrall.com
July 18, 2000
Kirk McDonald
Community Development Director
C/ty of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
New Hope Business Subsidy Criteria
Our File No.: 99.10049
Dear Kirk:
Please fred enclosed for consideration at the July 24, 2000 New Hope City Council and New
Hope EDA meetings a Resolution Establishing Business Subsidy Criteria pursuant to
Minnesota Statute~ Section 116J.993 to 116J.995. Attached to both Resolutions are the
specific criteria.
As you know, a public henring was held on this issue at both the City Council and EDA
meetings on June 26~. The public hearings were closed at said meetings and the
consideration of the policy was referred to a City Council workshop. The City Council
directed staff to bring back a revised policy for consideration at the July 24~ meeting.
Attached to the enclosed Resolutions nre the revised policies.
The criteria has changed from the document which was previously provided. Specifically,
the enclosed policy now sets forth expressed wage goals in connection with a provided
subsidy. Said specific wage goals resulted from a legislative amendment occurring in the
2000 session. Apparently, cities were adopting policies permitting them to establish wage
and job goals on a case by case basis. The legislaVare apparently disliked that practice and
required specific goals to be set forth in the policy. We can deviate from those goals,
however, any deviation must be accompanied by a written resolution making findings for
the deviation.
Basically, the enclosed policy sets a wage goal for New Hope that would require the
creation or retention of at least one job paying a living wage for every $50,000 of assistance
provided. This basically means a job which pays at least $10 per hour or approximately
0,0. 00 ar~. ually ..based on .federal pove~y level definitions. The Council and
t$o2rmse or lower mat number as thev --- ~ .... EDA are free
~ ~ lm ~ldso, t~ey can use a specific hourly wage
number and do not have to base it on a formula using the federal poverty level. The Council
and EDA are lYee to discuss the specific criteria and change or amend it in any fashion they
see frL The only requirement is that they have in their policy a specific wage and job goal
if the creation or retention of jobs are the public purpose for the subsidy.
11:14 FAX 7634935193 JF_,NSEN & SONDRALL, PA ~uuo ~
07/18/00
.luly 18, 2000
Page 2
The legislature also amended and broad~ned the number of exceptions that will preclude the application of
the enclosed policy. Those new exceptions are set forth in numbers 18 through 22 of the exceptions to
criteria. Further, number $ was br°ad~ned to include designated historic preservation districts, number 8 was
amended to specifically include bAT~rdous substance tax increment financing subdistricts and number 14 was
amended to include refunding bond issues and bonds sold for the benefit of 501(c)(3) organizations.
Please contact me if you have any questions or comments concerning the substance of this letter, the
Resolutions or the business subsidy criteria. Also note that a resolution will be required from both the City
Council and the EDA.
Steven A. Sondrall
JEnS~ & 8o~mo, t.L, P.A.
Enclosures
cc: Dan Donahue
Phil Kern
Daryl Sulander
Valerie Leone