HomeMy WebLinkAboutResolution No. 086-17 - 2017REvisedPolicy.TaxIncrement/FinanceAbatement
RESOLUTION
BE IT RESOLVED by the Common Council of the City of Rochester that the City adopt the
attached 2017 Revised Policy on Development Incentives for Tax Increment Financing and Tax
Abatement.
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA, THIS __________ DAY OF _______________, 2017.
___________________________________
PRESIDENT OF SAID COMMON COUNCIL
ATTEST: __________________________
CITY CLERK
APPROVED THIS _____ DAY OF ______________________, 2017.
________________________________
MAYOR OF SAID CITY
(Seal of the City of
Rochester, Minnesota)
Res15\\Adopt\\TIF Policy1
CITY OF ROCHESTER POLICY ON DEVELOPMENT
INCENTIVES FOR TAX INCREMENT FINANCING AND TAX
ABATEMENT
I. GENERAL POLICY
The purpose of this policy is to establish guidelines and procedures for the
provision of development incentives to private businesses. The fundamental
purpose of providing development incentives are 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 may be provided when the city believes that the desired
development would not occur without municipal involvement. The city reserves
the sole right to accept or reject proposals 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
Within these stated priorities, the city will consider providing development
incentives to private projects to achieve one or more of the following objectives:
A. Encourage development or redevelopment consistent with the goals and
objectives of the City of Rochester.
.
B. To encourage the redevelopment of developed areas through the removal
of blight and blighting conditions.
C. To retain jobs and / or increase the number and diversity of quality jobs.
D. To provide a balanced and sustainable housing stock and to promote
neighborhood stabilization and revitalization.
E. To increase the city’s tax base.
F. To encourage additional unsubsidized private development, either directly,
or through secondary “spin-off” development.
G. To meet other public objectives as determined by the Council.
III. PRIORITIES FOR USE OF DEVELOPMENT INCENTIVES
(Projects that meet 1, 2 or 3 below are considered to be of equal priority and are a
higher priority for the use of development incentives than other projects).
1. Development or redevelopment projects that are included in the Destination
Medical Center Development Boundary Area that further the goals and
objectives of the DMC Development Plan and / or the Rochester Downtown
Master Plan as determined by the City.
2. Economic development projects of an industrial or manufacturing nature, that
are consistent with the Minnesota Statutes and that create or retain living wage
jobs or increase the tax base in the City.
3. Housing TIF District projects must provide for at least 40% of the units to be
affordable to persons at 60% area median income. For housing TIF District
development projects seeking development incentives, priority will be given to
those projects that
a. Take advantage of an infill site.
b. Are within ¼ mile of bus stop.
c. Are located within ½ mile of essential services that serve the property.
d. Are within the 4 minute EMS response time.
4. Other Redevelopment projects. Determination of project approval should
consider the following:
a. The project site is deemed to be blighted or distressed and in
significant need of renovation or redevelopment, as evidenced by
declining property value, several years of high vacancy rates or
negative impacts on the surrounding neighborhood; or
b. The site’s proximity to the downtown core and transit availability; or
c. The site is deemed to have a concentration of households to support
the proposed use of the site; or
d. If the project includes a housing component, a goal of 20 % of the
units must be affordable to persons at 60% of the area median income.
5. Other projects deemed critical to the long range economic development of the
City, or as identified for transit oriented redevelopment in the Comprehensive
Plan, as determined by the Mayor and City Council.
IV. POLICIES
A. To directly link the level of assistance provided to a project to the attainment of
the objectives defined above.
The level of public assistance provided to a project shall be commensurate with the
extent to which the project addresses specific redevelopment, DMC Plan, economic
development or housing goals and objectives. Assistance shall be limited to the
minimum amount necessary for the successful construction of the project and to
address an identified funding gap.
B. To keep the payback period for bonds, loans, abatements, or other forms of
assistance to the shortest term possible.
C. To structure any assistance in such a manner as to minimize financial risk to the
city. Up front bonding will primarily be directed to City owned public
infrastructure. All other assistance will be typically done on a “PAYGO”
reimbursement basis.
D. To require proposers to provide full disclosure of project information so that the
city can assess the need for incentives.
E. To require guarantees and other forms of financial security commensurate with
risk incurred by the city.
V. PERMISSIBLE COSTS
The city may provide financial incentives to cover any cost permitted by regulation
or statute. While the city will consider any eligible cost, it reserves the right to
participate in only those costs it deems appropriate.
VI. PROVISIONS
A. Proposers 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-formas, source and use of funds
statements, market and feasibility studies and similar documents.
B. Projects must be consistent with the city’s comprehensive plan, zoning ordinance
and other land use policies. Projects not consistent with such plans, ordinances
and policies must obtain land use approvals prior to provision of any financial
assistance.
C. Redevelopment Projects should leverage the maximum private investment
possible. Desired goals of the City are a maximum city funding of no more than
th
1/10 of the project costs and not more than 75% of the estimated project tax
increments being provided to the developer.
D. If incentives are to be provided, proposers must submit evidence of private
financing satisfactory to the city, or secure the city's costs before the city makes
any significant financial commitment to a project
E. In the case of tax increment financing projects, prior to the execution of any
assistance agreements, the proposer must complete project plans and provide
project financial data in sufficient detail to allow the Olmsted County Assessor to
estimate the market value of the project upon completion, and provide evidence
satisfactory to the City that private financing is secured
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 the City's 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,
proposers will be required to pay the costs of such consultants.
H. In the case of tax increment projects, proposers 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”.
VII. LIMITATIONS
A. Development incentives will not be used to support projects that place
extraordinary demands on city services and infrastructure, unless such demand
is mitigated as part of the project.
B. Because tax abatement requires an offsetting levy increase, it will be used in
very limited instances, primarily used to encourage development or
redevelopment of the central business district or DMC Plan boundary area.
Tax abatement will not 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, historic preservation and public infrastructure projects. For
manufacturing and technology projects, tax abatements will be considered
only if 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. Where new job creation provides the primary rationale for the granting of
development incentives, the city will consider providing assistance to
employers paying a living wage, shall consider the number of jobs generated
and the wage and benefit levels provided by the Company as factors in
determining the amount of assistance for 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.
D. For Statutory Housing TIF District projects that typically include housing
revenue bonds or other state or federal housing assistance, the following
guidelines will be considered:
1. A threshold of no more than $12,000 / dwelling unit or a maximum
of 15 years of available tax increments, whichever is less.
2. Priority for TIF assistance will be given to those housing projects
that have been successful in leveraging other sources of funding
such as housing tax credits, housing bond funding or other
sources,
3. The City reserves the right to limit the number of housing units
assisted annually.
VIII. PROCESS
A. Prior to submission of a formal application requesting development
incentives, the proposer shall meet with staff to discuss the nature of the
proposal and its relationship to the City’s and or DMC Plan development
goals, objectives, and priorities. Procedures and submission requirements will
also be reviewed. For projects located within the DMC Development Plan
boundary area, the City / DMC EDA joint staff application submittal and
review process will be followed.
B. The proposer shall submit sufficient copies of his / her proposal to the City
Administrator for distribution to appropriate officials and staff.
C. Staff will review the proposal and submit a written report to the Council
and/or City Economic Development Authority (EDA) outlining its findings.
The Council and City EDA may accept the proposal, reject it, or indicate to
the proposer those modifications to the proposal necessary for continued
consideration.
D. A recommendation to accept the proposal shall include the basic terms and
conditions of an agreement to be entered into by the city and the proposer.
E. The terms of the agreement and staff report and recommendation will be
presented to the Common Council and/or the City EDA for final action.
IX. SUBMISSION OF PROPOSALS
Proposals for development incentives shall include the following information:
A. A completed application form and application fee.
B. Qualifications of the proposer including prior experience with similar projects.
Qualifications, where applicable, of principal members of development team,
including the architect, construction company, and financial advisor.
C. Financial capability of the proposer to undertake the project.
D. Site plans, schematics, and narrative describing the location, type, scope, and
size of the project.
E. Identification of all public assistance being sought.
F. Preliminary analysis showing existing taxes, estimated future taxes, and for
economic development projects, the number of new jobs created, by wage level.
G. The proposers 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.
X. APPLICATION INFORMATION
Applicants shall include the information listed in the City or DMCC application
form that will be provided. 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. A $5,000 application fee must be attached to the application. This fee is
designed to cover a portion of the city's costs associated with evaluating the
proposal. If warranted by the complexity of the proposal, additional deposits
may be required to cover City out of pocket expenses related to the application
process. If the project is determined to be a DMC Plan project, the application
filing fee shall be $10,000.
Downtown/devincentpolicy2.doc