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HomeMy WebLinkAboutResolution No. 055-08 s • RESOLUTION BE IT RESOLVED by the Common Council of the City of Rochester that the City adopt a Development Assistance Policy for the use of tax increment, tax abatement and other City incentives. A copy of the policy is attached. PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS W3kb DAY OF C�&ckW , 2008. PRESIDENT OF SAID COMMON COUNCIL ATTEST: � �Ty �"z`'� iCI CLERK APPROVED THIS Z4fh DAY OF C�G'�'1CG , 2008. • MAYOR OF SAID CITY (Sealbf the City of Rochester, Minnesota) Res05Wdopt GevAssis;Policy • • POLICY FOR TAX INCREMENT FINANCING, TAX ABATEMENT AND OTHER CITY INCENTIVES AND ASSISTANCE I. GENERAL POLICY The purpose of this policy is to establish guidelines and procedures for the provision of development incentives to private businesses. Development incentives are intended to encourage the redevelopment of the City's older residential, commercial, and industrial areas; to preserve and expand the City's economic and employment base, and to provide affordable housing. Development incentives will be provided when the City believes that the desired development would not otherwise occur without municipal participation. The City reserves the sole right to accept or reject applications for development assistance, taking into account the degree to which they adhere to the intent of this policy and any other factors the City Council may wish to consider. II. OBJECTIVES • The City will consider providing development incentives to private projects to achieve one or more of the following objectives: A. To encourage the redevelopment of commercial and industrial areas through the removal of blight and blighting conditions. B. To retain jobs and/or increase the number and diversity of quality jobs. C. To provide a balanced and sustainable housing stock and to promote neighborhood stabilization and revitalization. D. To increase the City's tax base. E. To encourage additional unsubsidized private development, either directly, or through secondary"spin-off' development. F. To meet other public objectives as determined by the Council. III. GUIDELINES The following guidelines will be utilized in evaluating applications for • development assistance. A. To directly link the level of assistance provided to a project to the extent to which it leads to the attainment of the objectives defined above. B. To limit assistance to the minimum amount necessary to assure the successful accomplishment of a project. C. To keep the payback period for bonds, loans, abatements, or other forms of assistance to the shortest term possible. D. To structure any assistance in such a manner as to minimize financial risk to the city. E. To require applicants to provide full disclosure of project information so that the City can assess the need for incentives. F. To require guarantees and other forms of financial security commensurate with risk incurred by the City. IV. PERMISSIBLE COSTS The City may provide financial incentives to cover any cost permitted by regulation, statute or ordinance. While the City will consider any eligible cost, it reserves the right to participate in only those costs it deems appropriate. V. CONDITIONS A. Applicants will be required to submit project and financial data in sufficient detail to document their need for assistance. Such information may include, but not be limited to, financial statements, project pro-formal, source and use of funds statements,market and feasibility studies and similar documents. B. Projects must be consistent with the City is comprehensive plan, zoning ordinance and other land use policies (available through the City's web site at www.rochesternrn.gov). Projects not consistent with such plans, ordinances and policies must obtain waivers, variances, amendments or other approvals prior to provision of any financial assistance. C. City assistance should leverage the maximum private investment possible. Generally, projects should achieve a minimum of a 4 to 1 private to public investment ratio with a ratio of at least 8 to 1 being desirable. Lesser ratios may be acceptable where unique circumstances exist. D. If incentives are provided on anything other than a pay as you go basis, applicants must submit evidence of private financing for their project in a form satisfactory to the City. • E. In the case of tax increment financing projects, prior to the execution of any assistance agreements, the applicant must complete project plans in sufficient 1 • detail to allow the County Assessor to estimate the market value of the project upon completion. F. The City may require collateralized guarantees, assessment agreements, and other forms of security to protect the public's investment in the project. The amount of security required will be based on an assessment of the risk of the project. G. In evaluating a project, the City may utilize outside legal, financial, real estate, marketing, design and other consultants. Unless waived by the Council, applicants will be required to pay all or a part of the costs of such consultants- H. In the case of tax increment projects, applicants must agree to provide documentation of actual allowable costs no less than quarterly during project construction. These costs must be categorized as required by the State of Minnesota"Tax Increment Financing Authority Report". VI. LIMITATIONS A. Generally, development incentives will not be used to support projects that place extraordinary demands on City services and infrastructure, unless such • demand can be mitigated as part of the project. B. Tax abatement is primarily intended to encourage downtown redevelopment It is not intended to be used for retail or office projects located outside of the central business district. In limited circumstances, the Council may consider the use of tax abatements to assist manufacturing and technology, housing, and public infrastructure projects. .. For manufacturing. and technology projects, tax abatements will be considered when it is not feasible to provide assistance through tax increment financing and then, only when there is an imminent threat of significant job loss,.or when there will be a significant increase in new jobs. C. For projects where new job creation or job retention provides the primary rationale for the granting of development incentives, the wage levels paid by the Company will be a significant-factor in determining the amount of assistance granted to the project. Assistance agreements may include provision for repayment of all or a portion of the assistance granted if the business fails to either create or maintain the targeted number of jobs at the stated pay level thresholds. VII. PROCESS • A. Prior to submission of an application requesting assistance from the City, the applicant shall meet with staff to discuss the nature of the proposal and its relationship to the City's development goals, objectives, and priorities. Procedures and submission requirements will also be reviewed. In the case of downtown redevelopment projects, the applicant shall also meet with the Executive Director of the Rochester Downtown Alliance (RDA). B. The applicant shall file a written application for assistance with the City Administrator's Office with sufficient copies for distribution to appropriate officials and staff. The application shall include contact information for property owners and tenants located within the boundaries of the proposed project. Upon receipt of a complete application, staff will provide the Council with a summary of the proposal. Owners and tenants located within the projects limits will be provided with written notification of the application. Other appropriate organizations, including the RDA and CUDE, will also be provided notice of the application. Depending on the size and complexity of the project, the applicant maybe asked to make a preliminary presentation to the Council at a Committee of the Whole meeting. C. Following receipt of the application, staff will attempt to negotiate the terms of development assistance agreement with the applicant,periodically updating the Council on the status of those negotiations. In the case of downtown projects, updates will also be provided to the RDA Executive Director • D. The terms of the development agreement along with a staff report and recommendation will be presented to the Common Council for final action. V.1H. .SUBMISSION OF APPLICATIONS Applications for development assistance shall include the following information: A. A completed set of application forms and an application fee. B. Qualifications of the applicant including prior experience with similar projects. Qualifications,where applicable, of principal members of the development team, including the architect, construction company, and financial advisor. C. Financial capability of the applicant to undertake the project. D. Site plans, schematics, and narrative.describing the location, type, scope, and size of the project. E. Identification of all financial and other public assistance being sought (including zoning changes or variances, street or alley vacations, parking, skyway connections and similar items). • F. Preliminary analysis showing existing taxes, estimated future taxes, and for economic development projects,the number of new jobs created,by wage level. a x �• G. The applicant's source and use of funds including any public assistance being requested. H. A preliminary listing of any approvals, permits, licenses or other authorizations required for the project. I. A statement identifying the specific public objectives the project will address. J. A preliminary schedule identifying significant milestone dates leading to the completion of the project. K.. Any other pertinent data the City may require. Applications may very greatly in terms of the nature and the amount of assistance requested and in their complexity. Not all projects will warrant all of the information requested above. In evaluating the completeness of an application, staff may use reasonable discretion in modifying or waiving specific requirements of this section. IX. APPLICATION INFORMATION Applicants shall include the information listed below in their applications. Not . . all of the information will be needed for every proposal. The applicant will work with City staff to assure all appropriate information is provided. A. Applicant Information a. Name b. Address C. Phone d. Authorized representative e. Business form(partnership, corporation, etc.). f. Date the partnership or corporation was formed. B. Names and addresses of principal partners,major stockholders, etc. C. Names and contact information for firms providing consulting services for the project. a. Architect/Engineering b. Financial C. Market d. Legal . e. Other D. Financing/Financial History/References a. Please provide an outline of the anticipated financing structure for the project. b. Have you or any of the principals in the project ever filed for bankruptcy? C. Have you or any of the principals in the project ever defaulted on property taxes for property located in the City of Rochester? d. Are you or any of the principals in the project presently delinquent on property taxes for property located in the City of Rochester? e. Please list three financial references. E. A $5,000 application fee must be attached to the application. This fee is designed to cover the City's out of pocket costs associated with evaluating the application. If warranted by the complexity of the application, additional deposits may be required. Downtown/devincentpolicy1doc