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Home My WebLink About2016-01-06 PACKET 06.B. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM #� � DATE 01/06/16 • PREPARED BY: Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD * � * * * * * * * * � * * * * * � * � � * * :� * * � * � * * � * * * * * * * * * * * * * * * * * COUNCIL ACTION REQUEST: Public Hearing: Creation of Tax Increment Financing (TIF) district 1-16 (Gardenworld). STAFF RECOMMENDATION: 1) Adopt resolution modifying Development District #1, establishing TIF District 1-16 (Gardenworld) and adopting the TIF plan for the District. 2) Adopt resolution authorizing an interFund loan for the advance payment of costs in connection with TIF District 1-16 (Gardenworld). BUDGET IMPLICATION: BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION: DATE REVIEWED APPROVED DENIED ❑ PLANNING ❑ ❑ ❑ ❑ PUBLIC SAFETY ❑ ❑ ❑ ❑ PUBLIC WORKS ❑ ❑ ❑ ❑ PARKS AND RECREATION ❑ ❑ ❑ ❑ HUMAN SERVICES/RIGHTS ❑ ❑ ❑ ❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS: � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: � OTHER: TIF district overview & TIF plan ADMINISTRATORS COMMENTS: � ' , ' r' � � z�� o . I� _ City Administrator Date * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * :� * * * � * ,� � H:\Council items\council-action template.docx Cottage Grove �here Pride and prOSperity Meet � To: Mayor and City Council Members � Charlene Stevens, City Administrator ' From: Robin Roland, Finance Director Date: December 29, 2015 � Subject: Public Hearing on the proposed creation of TIF District 1-16 I Introduction � The EDA adopted a resolution at their November 10, 2015 meeting requesting that the City Council call ' a public hearing to consider establishment of a TIF district for the construction of a new facility in the I Business Park. The City Council adopted a resolution at their November 18, 2015 meeting calling a � public hearing for the January 6, 2016 City Council meeting to consider creating TIF District 1-16 in the ', Business Park for construction of the Gardenworld facility. Discussion Belijah, LLC, (dba: Gardenworld) is planning construction of a 38,400 sq. ft. office/warehouse facility and a 43,560 sq. ft. greenhouse on nine acres in the Business Park. The TIF plan is attached with this item. The district is an economic development district which will provide tax increments of averaging $47,000 � for nine years beginning in 2018. These revenues will reimburse land and site development costs under � the project budget outlined on pages 2-5 and 2-6 in the TIF plan. A cash flow for the TIF plan is included I in Appendix D and the required "but for" analysis is covered in Appendix F. ; The EDA held a public hearing on December 8, 2015 on the land sale and business subsidy components of this project and approved both by EDA resolution 2015-011. The Planning Commission reviewed the TIF plan at their December 21, 2015 meeting. They found the ' plan to be in conformity with the comprehensive plan of the city and passed resolution PC2015-002 to that effect. i Because the EDA/City is paying the expenses of the project up front and being reimbursed by the TIF over time, an InterFund loan must be set up by statute to reflect the transaction. A resolution setting up that InterFund loan is also included with this item. Action Requested I i Adopt the resolution modifying the development district number 1, establishing TIF District 1-16 i (Gardenworld) and adopting the TIF plan for the district. Adopt the resolution authorizing an Interfund loan for the advance payment of costs in connection with � TIF District 1-16 (Gardenworld). � I � � I Tax Increment Financing District Overview City of Cottage Grove Tax Increment Financing District No. 1-16 (Gardenworld) I The following summary contains an overview of the basic elements of the Tax Increment Financing Plan , for Tax Increment Financing District No. 1-16 (Gardenworld). Mare detailed information on each of these topics can be found in the complete Tax Increment Financing Plan. , Proposed action: ➢ Establishment of Tax Increment Financing District No. 1-16 (Gardenworld) (District) and the adoption of a Tax Increment Financing Plan(TIF Plan). � ➢ Modification to the Development Program for Development District No. 1 includes the establishment of Tax Increment Financing District No. 1-16 , (Gardenworld),which represents a continuation of the goals and objectives i set forth in the Development Program for Development District No. 1. ➢ Pass an Interfund Loan in conjunction with the District. Type of TIF District: An economic development district ', Parcel Numbers: 20.027.21.44.0005 � Proposed The District is being created to facilitate the construction of an approximately i Development: 34,200 square foot warehouse, 4,200 square foot office space, and 43,560 square foot greenhouse in the City. Please see Appendix A of the TIF Plan for a more detailed project description. Maxilnum duration: The duration of the District will be 8 years from the date of receipt of the first , increment (9 years of increment). First increment is expected to be received ' in 2018. It is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after ' December 31, 2026, or when the TIF Plan is satisfied. (If increment is , received in 2017,the District will terminate on December 31,2025). � Estimated annual tax Up to$55,459 � increment: � I � Authorized uses: The TIF Plan contains a budget that authorizes the maximum amount that may be expended: LandBuilding Acquisition......................................................$50,000 Site Improvements/Preparation.............................................$150,000 Utilities....................................................................................$80,000 Qualifying Improvements .......................................................$55,129 Administrative Costs(up to 10%)...........................................$42,147 PROJECT COSTS TOTAL..................................................$377,276 Interest.....................................................................................$86,341 PROJECT COSTS TOTAL............................................... 4 3 17 See Subsection 2-10, on page 2-6 of the TIF Plan for the full budget authorization. Form of financing The project is proposed to be financed either by a bond issue, pay-as-you-go note, or interfund loan. Administrative fee: Up to 10% of annual increment, if costs are justified. Interfund Loan Since the City will be paying for administrative and capital expenditures prior Requirement: to the increment being collected by the District, the EDA or City are required to approve that a resolution authorizing a loan from another fund PRIOR to the issuance of the check. Green Acres The District does contain a parcel that qualified under the provisions of M.S., (Subsection 2-6 of Section 273.111 or 273.112 or Chapter 473H for taxes payable in any of the the TIF Plan) five calendar years before the filing of the request for certification of the District. The facility assisted by the District is a manufacturing (greenhouse) and warehouse facility and the developer has agreed to pay and pay 90 percent or more of the employees of the facility at a rate equal to or greater than 160 percent of the federal minimum wage for individuals over the age of 20. 4 Year Activity Rule After four years from the date of certification of the District one of the (�¢469.176 Subd. 6) following activities must ha�e been commenced on each parcel in the District: • Demolition • Rehabilitation • Renovation • Other site preparation (not including utility services such as sewer and water) If the activity has not been started by approximately January 2020, no additional tax increment may be taken from that parcel until the commencement of a qualifying activity. 5 Year Rule Within 5 years of certification revenues derived from tax increments must be (�¢469.1763 Subd. 3) expended or obligated to be expended. Any obligations in the District made after approximately January 2021, will not be eligible for repayment from tax increments. The reasons and facts supporting the findings for the adoption of the TIF Plan for the District, as required pursuant to M.S., Section 469.175, Subd. 3, are included in E�ibit A of the City resolution. MAP OF DEVELOPMENT DISTRICT NO. 1 ANID I TAX INCREMENT FINANCING DISTRICT NO. 1-16 (GARDENWORLD) i ; •_ �,� � ,�� , � i _ � � scRff sr�c�e,�i4) , ," , . ; ' � ' ; � i � — i 3 _ � � " - �� ,I '� .;� +� - '. .. !t . �'� � YIPC�� , �� 701'N$ �4'.6;A,H.'�0)�. I f. „ 7 '� ` —'4r � i.:RiR(AN Bb.VA �„I . I � a � � t , � i r f 1� � � � � � ��f �, �� 1� _ .... ... . . , �-` �_ � ; � , �� ; ' . ; , ' i = � , i_ � ' mw�r �� '- � �.� F'- ,; �' ��_ a �.,N�, ,.x ,.`." `�� _� so-��t�r � �I ��.:' � Tax lncrenicni i"rnanc�n� .y` � I � � : . " Di�irict iw�. i-lti .' � a � , - , � i _ �� , ,� _ � ,� i , ', .. 0f6`. � :. � .-_� ' ...; �� .. � � , � . ' .;: � ; ., . . y� . .... ' � �� ' 3;� _.. .. � 7 3 i . � ; � E ,,t , ��,� � �� - i _i � �`' �� a.�� '� � i � ; . I R� � � I =� , : , �, ° i ...�� "'�E3 tr � ,� . l. � . . . T : I � � 4 'x �6 H�O�X,_ ( � 1" $ '� `� �I �'r i�� {3 I .. __ ..�.: . . � ' ' r.,. . i �a ' ..� ' �� , r �... I y. � �� !' � �� i ,, �, � � ; ti, - �_ �, . ,. 3 ,�„�., '��.' ..�. ,� � �� '— -- 4:.._ . '. ! �. E - I ., � , . . ., . .. . _.. . ..... ,. ------ � : _ _�� f ( � , � �..� ' E . ` E � �� .Ucv�laptn�ni I}is#��i 1��.1 � , , I , � �liarwsr , t3 � I �,�T' � re��' ' ` � i = ��5� . � '� .� ..._ ,. z � i . ;y , C[�{P - `'' . . �—, �[ - . . : , . '�` 7y - ' �� '.. ��, 3.� '. :: .. , � ��: ..... �� .. � � . i .. �= 3 "r .�. � �-, ��' '':: _ " i � I ;�.: -. .., '. ''� I �.. :' .. .� . _ .__. �- .. .. �:. :. T�x Ii��reit��rit I'iriat�cin�I}istrict 1*w`a, 1-1� De�rel��eiit District �30. 1 (��`ity c�f.��itta�e+�sr�ve � �V�xsliuz�i�in Gr�unly,Mi�u�esr�ta ! I � � � i CITY OF COTTAGE GROVE II � WASHINGTON COUNTY STATE OF MINNESOTA ' Council member introduced the following resolution and moved its adoption: � RESOLUTION NO.2016- RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.1;AND ESTABLISHING TAX ', INCREMENT FINANCING DISTRICT NO. 1-16 (GARDENWORLD) THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. I BE IT RESOLVED by the City Council (the "Council") of the City of Cottage Grove, Minnesota , (the "City"), as follows: '', Section 1. Recitals. 1.01. The Board of Commissioners of the Cottage Grove Economic Development Authority(the ', 'BDA") has heretofore established Development District No. 1 and adopted the Development Program ' therefor. It has been proposed by the EDA and the City that the City adopt a Modification to the Development Program (the "Development Program Modification") for Development District No. 1 (the "Project Area") and establish Tax Increment Financing District No. 1-16 (Gardenworld) (the "District") , therein and adopt a Tax Increment Financing Plan (the "TIF Plan") therefar (the Development Program , Modification and the TIF Plan are referred to collectively herein as the "Program and Plan"); all pursuant � to and in conformity with applicable law, including Minnesota Statutes, Sections 469.090 to 469.1082 and Sections 469.174 to 469.1794, all inclusive, as amended, (the "Act") all as reflected in the Program and � � Plan, and presented for the Council's consideration. 1.02. The EDA and City have investigated the facts relating to the Program and Plan and have caused the Program and Plan to be prepared. i 1.03. The EDA and City have perfarmed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Program and Plan, including, but not limited to, notification of Washington County and Independent School District No. 833 having i taxing jurisdiction over the property to be included in the District, a review of and written comment on the � Program and Plan by the City Planning Commission, approval of the Program and Plan by the EDA on , December 8,2015, and the holding of a public hearing upon published notice as required by law. ' 1.04. Certain written reports(the"Reports")relating to the Program and Plan and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Program and Plan. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution.The Council hereby confirms,ratifies and adopts the Reports,which are hereby incorporated into and made as fully a pai�t of this resolution to the same extent as if set forth in full herein. � i I 1.05 The EDA elects to calculate fiscal disparities for the District in accordance with Minnesota Statutes, Section 469.177, Subd.3,clause b,which means the fiscal disparities contribution would be taken from inside the District. 1.06. The City is not modifying the boundaries of the Project Area, but is however, modifying the Development Program therefor. Section 2. Findin�s for the Adoption and Ap�roval of the Development Prog,ram Modification. 2.01. The Council approves the Development Program Modification,and specifically finds that: (a)the land within the Project area would not be available for redevelopment without the financial aid to be sought under this Development Program; (b) the Development Program, as modified, will afford maximum opportunity, consistent with the needs of the City as a whole,for the development of the Project Area by private enterprise; and (c) that the Development Program, as modified, conforms to the general plan for the development of the City as a whole. Section 3. Findings for the Establishment of Tax Increment Financing District No. 1-16 (Gardenworld). 3.01. The Council hereby finds that the District is in the public interest and is an "economic development district" under Minnesota Statutes, Section 469.174, Subd. 12 of the Act. 3.02. The Council further fmds that the proposed development would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to resuit from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Tax Increment Financing Plan, that the Program and Plan conform to the general plan for the development or redevelopment of the City as a whole; and that the Program and Plan will afford maximum opportunity consistent with the sound needs of the City as a whole,for the redevelopment or development of the District by private enterprise. 3.03. The Council further fmds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as E�ibit A. Section 4. Public Purpose. 4.01. The adoption of the Program and Plan conforms in all respects to the requirements of the Act and will result in preservation and enhancement of the tax base of the State and thereby serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits directly derive from the tax increment assistance provided under the TIF Plan. A private developer will receive only the assistance needed to make this development financially feasible. As such,any private benefits received by a developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Program and Plan. , 5.01. The Program and Plan, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the EDA Executive Director. , 5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to ', proceed with the implementation of the Program and Plan and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 The Auditor of Washington County is requested to certify the original net tax capacity of ', the District,as described in the Program and Plan,and to certify in each year thereafter the amount by which ', the original net tax capacity has increased or decreased;and the EDA is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building pennits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The City Administrator is further authorized and directed to file a copy of the Program and ', Plan with the Commissioner of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes ' 469.175, Subd. 4a. � I i The motion for the adoption of the foregoing resolution was duly seconded by Council member , and upon a vote being taken thereon,the following voted in favor thereof: �� and the following voted against the same: i Dated: January 6, 2016 ATTEST: ' ( Mayor City Administrator II I (Seal) � I I EXHIBIT A RESOLUTION NO.2016- The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 1-16 (Gardenworld)as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that the Tax Increment Financing District No. 1-16(Gardenworld) is an economic development distr�ict as defined in M.S., Section 469.174, Subd. 12. Tax Increment Financing District No. 1-16(Gardenworld)is a contiguous geographic area within the City's Development District No. 1, delineated in the TIF Plan,for the purpose of financing economic development in the City through the use of tax increment. The District is in the public interest because it will facilitate the construction of an approximately 34,200 square foot warehouse,4,200 square foot office space, and 43,560 square foot greenhouse which will preserve and enhance the tax base of the state. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occuN solely through pNivate investment within the�easonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the maNket value estimated to result from the proposed development after subtracting the present value of the pNojected tax increments for the maximum duration of Tax Increment Financing Distr�ict No. 1-16(Gardenworld)permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely th�ough private investment within the Neasonably foreseeable future: This finding is supported by the fact that the development proposed in this plan is a manufacturing(greenhouse) and warehouse facility for Gardenworld that meets the City's objectives for economic development. The cost of land acquisition, site and public improvements and utilities makes development of the facility infeasible without City assistance. The increased n�arket value of the site that could reasonably be expected to occur without the use of tax increment financing would be Zess than the increase in market value estimated to result fi�om the pNoposed development afteN subtracting the pNesent value of the projected tax increments for the marimum duration of the TIF Distr�ict pe�n�itted by the TIF Plan: The City supported this finding on the grounds that the cost of land acquisition, site and public improvements and utilities add to the total development cost. Historically, site development costs in this area have made development infeasible withoLrt tax increment assistance. The City reasonably deterrnines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development. Therefore,the City concludes as follows: a. The City's estimate of the amount by which the market value of the entire District will increase without the use of tax increment financing is $0. b. If the proposed development occurs,the total increase in market value will be $2,998,786. c. The present value of tax increments from the District for the maximum duration of the district permitted by the TIF Plan is estimated to be $326,712. d. Even if some development other than the proposed development were to occur,the Council finds that no alternative would occur that would produce a market value increase greater than$2,672,074(the amount in clause b less the amount in clause c)without tax increment assistance. I 3. Finding that the TIF Plan for Tax IncrenZent Financing Distr�ict No. 1-16(GardenwoNld)confornzs to the general plan for the development or redevelopment of the n�unicipality as a whole. ' The Planning Commission reviewed the TIF Plan and found that the TIF Plan conforms to the general ; development plan of the City. , 4. Finding that the Tax Incren2ent Financing Plan for Tax Incre�zent Financing District No. 1-16 ; (Gardenworld) will afford maximum opportunity, consistent with the sound needs of the City as a whole, , for the development of Development District No. 1 by private enterprise. ', The p�•oject to be assisted by the District will result in increased employment in the City and the State of ' Minnesota, increased tax base of the State,and add a high quality development to the City. � I I i 1 ( ' � � � � I I i i CITY OF COTTAGE GROVE , WASHINGTON COUNTY STATE OF MINNESOTA RESOLUTION NO.2016- I'� RESOLUTION AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH TAX INCREMENT FINANCING . DISTRICT NO. 1-16. I BE IT RESOLVED by the City Council(the "Council")of the City of Cottage Grove,Minnesota ', (the "City"),as follows: i Section 1. Back rg ound. 1.01. The City has heretofore approved the establishment of Tax Increment Financing District II No. 1-16 (the "TIF District")within Development District No. 1 (the "Project"), and has adopted a Tax Increment Financing Plan(the "TIF Plan")for the purpose of financing certain improvements within the Proj ect. 1.02. The City has determined to pay far certain costs identified in the TIF Plan consisting of qualifying improvements, interest and administrative costs(collectively,the "Qualified Costs"),which costs may be financed on a temporary basis from City funds available for such purposes. ; 1.03. Under Minnesota Statutes, Section 469.178, Subd. 7,the City is authorized to advance or loan money from the City's general fund or any other fund from which such advances may be legally authorized, in order to finance the Qualified Costs. 1.04. The City intends to reimburse itself for the Qualified Costs from tax increments derived � fi�om the TIF District in accordance with the terms of this resolution(which terms are referred to I collectively as the "Interfund Loan"). Section 2. Terms of Interfund Loan. 2.01. The City hereby authorizes the advance of up to$300,000 from fund 286 (EDA Trust)or so much thereof as may be paid as Qualified Costs. The City shall reimburse itself for such advances together with interest at the rate stated below. Interest accrues on the principal amount from the date of each advance. The maximum rate of interest permitted to be charged is limited to the greater of the rates � specified under Minnesota Statutes, Section 270C.40 or Section 549.09 as of the date the loan or advance is authorized, unless the written agreement states that the maximum interest rate will fluctuate as the interest rates specified under Minnesota Statutes, Section 270C.40 or Section 549.09 are from time to time adjusted. The interest rate shall be allowed to fluctuate. 2.02. Principal and interest("Payments")on the Interfund Loan shall be paid annually on each December 31 (the "Payment Date"), commencing on the first Payment Date on which the Authority has � Available Tax Increment(defined below), or on any other dates determined by the City Administrator, � through the date of last receipt of tax increment from the TIF District. j 2.03. Payments on this Interfund Loan are payable solely from "Available Tax Increment,"which shall mean, on each Payment Date,tax increment available after other obligations have been paid, or as ( I detertnined by the City Administrator, generated in the preceding twelve(12)months with respect to the property within the TIF District and remitted to the City by Washington County, all in accordance with Minnesota Statutes, Sections 469.174 to 469.1794, all inclusive, as amended. Payments on this Interfund Loan may be subordinated to any outstanding or future bonds,notes or contracts secured in whole or in part with Available Tax Increment, and are on parity with any other outstanding or future Interfund loans secured in whole or in part with Available TaY Increment. 2.04. The principal sum and all accrued interest payable under this Interfund Loan are pre- payable in whole or in part at any time by the City without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Interfund Loan. 2.05. This Interfund Loan is evidence of an internal borrowing by the City in accordance with Minnesota Statutes, Section 469.178, Subd. 7, and is a limited obligation payable solely from Available Tax Increment pledged to the payment hereof under this resolution. This Interfund Loan and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including,without limitation,the City. Neither the State of Minnesota,nor any political subdivision thereof shall be obligated to pay the principal of or interest on this Interfund Loan or other costs incident hereto except out of Available Tax Increment, and neither the full faith and credit nor the taxing power of the State of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Interfund Loan or other costs incident hereto. The City shall have no obligation to pay any principal amount of the Interfund Loan or accrued interest thereon,which may remain unpaid after the fmal Payment Date. 2.06. The City may amend the terms of this Interfund Loan at any time by resolution of the City Council, including a determination to forgive the outstanding principal amount and accrued interest to the extent permissible under law. Section 3. Effective Date. This resolution is effective upon the date of its approval. The motion for the adoption of the foregoing resolution was made by Council member duly seconded by Council member , and upon a vote being taken thereon,the following voted in favor thereof: and the following voted against the same: , Dated: January 6,2016 ATTEST: Myron Bailey,Mayor Charlene R. Stevens, City Administrator (Seal) .__.__._:.-��..��..:��.:�:_,_�-�:n-�-�;��_��-,�:_....:.��.�:_�.,-��,. ..._�_ ��--r:-._�_:�,,w.,-��w..-�-u:�:-:�::�_ .-.�:_�-_:.�. :�.�- i �4..._::A 4 . As ofDeceinber 29, 2015 Draft for Public Hea�^ing ; Modification to the Development Program ;. � for Development District No. 1 � and the �. Tax Increment Financing Plan � for the establishment of Tax Increment Financing District No. 1-16 Gardenworld (an economic development district) within Development District No. 1 Cottage Grove Economic Development Authority City of Cottage Grove � Washington County � State of Minnesota Public Hearing: Januaiy 6, 2016 Adopted: � Prepared by: EHLERS&ASSOCIATES, INC. H �� 306 651 697 8500 D XVe6 5 697-r8 5�inn�teh e5s nc com - - _ Table of Contents (for reference purposes only) Section 1 - Modification to the Development Program for Development District No. 1 . . . . . . . . . :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1 Section 2 -Tax Increment Financing Plan for Tax Increment Financing District No. 1-16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-1. Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-2. Statutory Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-3. Statement of Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-4. Development Program Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired . 2-2 Subsection 2-6. Classification of the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2 Subsection 2-7. Duration and First Year of Tax Increment of the District . . . . . . . . . . . 2-3 Subsection 2-8. Original Tax Capacity,Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements . . . . . . . . . . . . . . . . 2-4 Subsection 2-9. Sources of Revenue/Bonds to be Issued . . . . . . . . . . . . . . . . . . . . . . 2-5 Subsection 2-10. Uses of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5 Subsection 2-11. Fiscal Disparities Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-6 Subsection 2-12. Business Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7 Subsection 2-13. County Road Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8 Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions . . . . . . . . . . . . . . . . . 2-8 Subsection 2-15. Supporting Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10 Subsection 2-16. Definition of Tax Increment Revenues . . . . . . . . . . . . . . . . . . . . . . . 2-10 Subsection 2-17. Modifications to the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-10 Subsection 2-18. Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-11 Subsection 2-19. Limitation of Increment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12 Subsection 2-20. Use of Tax Increment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-12 Subsection 2-21. Excess Increments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-13 Subsection 2-22. Requirements for Agreements with the Developer . . . . . . . . . . . . . . 2-13 Subsection 2-23. Assessment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-14 Subsection 2-24. Administration of the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-14 Subsection 2-25. Annual Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-14 Subsection 2-26. Reasonable Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-14 Subsection 2-27. Other Limitations on the Use of Tax Increment . . . . . . . . . . . . . . . . . 2-15 Subsection 2-28. Summary . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . 2-15 Appendix A ProjectDescription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 Appendix B Map of Development District No. 1 and the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 Appendix C Description of Property to be Included in the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1 Appendix D Estimated Cash Flow for the District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1 i Appendix E Minnesota Business Assistance Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1 Appendix F Findings Including But/For Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 ', i � � � ( i i i i i , � Section 1-Modification fo the Development Program for Development Disfrict No. 9 ; Foreword ; The following text represents a Modification to the Development Program for Development District No. 1. ' This modification represents a continuation of the goals and objectives set forth in the Development Program for Development District No. 1. Generally, the substantive changes include the establishment of Tax Increment Financing District No. 1-16(Gardenworld). ', For further information, a review of the Development Prograin for Developinent District No. 1, adopted Januaiy 7, 1985,is recommended. It is available from the City Administrator at the City of Cottage Grove. Other relevant information is contained in the Tax Increment Financulg Plans for the Tax Increment � Financing Districts located within Development District No. L � � i I � � � i I Cottage Grove Economic Development Authority Modification to the Development Program for Development District No.1 1-1 I �I Section 2- Tax Incremenf Financing Plan i for Tax Increment Financing District No. 1-16(Gardenworld) ; Subsection 2-1. Foreword ' � The Cottage Grove Economic Development Authority(the"EDA"),the City of Cottage Grove(the"City"), staff and consultants have prepared the following information to expedite the establishment of Tax Increment ', Financing District No. 1-16 Gardenworld(the"District"),an econolnic development tax increment financing ' district,located in Development District No. 1. Subsection 2-2. Statutory Authority ', I Within the City, there exist areas where public iuvolvement is necessaiy to cause clevelopment or redevelopment to occur. To this end,the EDA and City have certain statutory powers puisuant to Minnesota ' Statutes ("M.S.'), Sections 469.090 to 469.1082, inchisive, as amended, and M.S., Sections 469.174 to ' 469.1794, inclusive, as amended(the "Tax Increment Financing Act" or"TIF Act"),to assist in financing public costs related to this project. This section contains the Tax Increment Fuiancing Plan (the "TIF Plan") for the District. Other relevant I information is contained in the Modification to the Development Program for Development District No. 1. i Subsection 2-3. Statement of Objectives ' The District currently consists of one parcel of land and adjacent and internal rights-of-way. The District is j being created to facilitate the construction of an approxilnately 34,200 square foot warehouse,4,200 square ' foot office space,and 43,560 square foot greenhouse in the City. Please see Appendix A for further District ', information. The EDA will be entering into an agreement with Gardenworld and development is lilcely to ' occur in 2016. This TIF Plan is expected to achieve many of the objectives outlined in the Development Program for Developmeiit District No. l. The activities contemplated in the Modification to the Development Program and the TIF Plan do not ' precllide the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Development District No. 1 and the District. I Subsection 2-4. Development Program Overview I l. Property to be Acquired-Selected property located within the District may be acquired by � the EDA and is further described in this TIF Plan. ; 2. Relocation - Relocation services, to the extent reqliired by law, are available pursuant to M.S., ChapteJ°117 and other relevant state and federal laws. i 3. Upon approval of a developer's plan relating to the project and colnpletion of the necessary legal requirements,the EDA inay sell to a developer selected properties that it may acquire within the District or may lease land or facilities to a developer. 4. The EDA inay perform or provide for• some or all necessary acquisition, construction, ( relocation, deinolition,and required utilities and public street work within the District. ' 5. The City proposes both public and private infrastructure within the District. The proposed � Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No. 1-16(Gardenworld) 2-1 � li reuse of private property within the District will be for a manufacturing and warehouse facility,and there will be continued operation of Development District No. 1 after the capital improvements within Development District No. 1 have`been completed. '' Subsection 2-5. Description of Property in the District and Property To Be Acquired � The District encoinpasses all property and adjacent rights-of-way and abutting roadways identified by the parcels listed in Appendix C of this TIF Plan. Please also see the map in Appendix B for further information ', on the location of the District. The EDA may acquire any parcel within the District including interior and adj acent street rights of way.Any properties identified for acquisition will be acquired by the EDA only in order to accomplish one or•more of , the following:storm sewer improvements;provide land for needed public streets,utilities and facilities;carry out land acquisition,site improvements,clearance and/or development to accomplish the uses and objectives i set forth in this plan. The EDA may acquire property by gift, dedication, condemnation or direct purchase I from willing sellers in order to achieve the objectives of this TIF Plan. Such acquisitions will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Subsection 2-6. Classification of the District ', The EDA and CiTy, in determining the need to create a tax increment financing district in accordance with M.S., Sections 469.174 to 469.1794, as amended, inclusive, find that the Dish•ict, to be established, is an economic development district pursuant to M.S., Section 469.174, Subd. 12 as defined below: "Econo»aic development dzstt^ict"tneans a type of tax inci^ement financing district which consists of any �I p��oject, or po�tions of a pNoject, which the authof�ity finds to be in the public interest because: i (1) it will discourage com�neNce, indush y, o��nanufactz��^ing fi^on2 moving their operations ; to another state oN municipality; or (2) it will�esult in increased en�ploy�nent in the state; or � (3) it lvzll��esult in p��eservation and enhancenaent of the tax base of the state. i The District is in the public interest because it will meet the statutory requirement fi•om clause 3. � Pursuant to M.S., Section 469.176, Subd. 4c, revenue derived fi•oin tax increinent fi�om an economic � development district inay not be used to provide unprovements, loans, subsidies, grants, interest rate , subsidies,or assistance in any form to developments consisting of buildiugs and ancillary facilities,if more i than 15 percent of the buildings and facilities (determined on the basis of square footage) are used for a I purpose other than: � (1) The manufactm�ing or production of tangible peisonal pz•operty, including processing resulting , in the ehange in condition of the property; (2) Warehousing,storage,and distriUution of tangible peisonal property,excluding retail sales; (3} Research and developinent related to the activities listed in items(1)or(2); (4) Telemarketing if that activity is the exclusive use of the property; or I (5) Tourism facilities; � (6) Space necessary for and related to the activities listed in items(1)to(5) In meeting the statutory criteria the EDA and City rely on the following facts and findings: I � Cottage Grove Economic Development Authority ��i Tax Increment Financing Plan for Tax Increment Financing District No. 1-16(Gardenworld) 2-2 �� 'I The facilities in the District meet the conditions of Purposes 1,2,and 6. ' The District is being created to assist in the construction of a manufacturing(green house)and warehottse I� facility for Gardenworid. The proposed facility will be used for manufacturing and warehousing items for their lasldscape and household plant nursery business and related activities. , Pursuant to M.S.469.176,Subd. 7(a),the EDA and City may request inclusion in the District and the County Auditor may certify the original tax capacity of a paz•cel or a part of a parcel that qualified under the provisions ofM.S. Sections 273.111,273.112, or 273.114 or Chapter 473Hfor taxes payable in any ofthe five calendar years before filing of the request for certification only far•: (1) a district in which 85 percent or more of the planned buildings and facilities(determined on the basis '', of square footage) are a qualified manufacturing facility or a qualified distribution facility or a '� combination of both; or (2) a housing district. � (b)(1) A distribution facility means buildings and other improvements to real property that are used to , conduct activities in at least each of the following categories: ' (i)to store or warehouse tangible peisonal property; , (ii)to take orders for shipments,mailing, or delivery; ' (iii)to prepare personal property for shipment,mailing, or delivery; and (iv)to ship,mail, or deliver property. i (2) A mallufacturing facility includes space used for manufacturing or producing tangible personal property, including processing resulting in the change of condition of the property, and space ' necessary for and related to the manufacturing activities. , (3) To be a qualified facility,the owner or operator of a manufacturing facility must agree to pay and pay ', 90 percent or moi•e of the employees of the facility at a rate equal to or greater than 160 percent of the federal minimum wage for individuals over the age of 20. The District does contain a portion of a parcel that qualified under the provisions of M.S. Sections 273.111, i 273.112, or 273.114 or Chapte�473Hfor taxes payable in any of the five calendar years before the filing of � the reqtiest for certification of the District. The facility assisted by the District is a manufacturing facility and j the developer has agreed to pay and pay 90 percent or more of the employees of the facility at a rate eqttal ; to or greater than 160 percent of the federal minimum wage for individuals over the age of 20: Subsection 2-7. Duration and First Year of Tax Increment of the District Pursuant to M.S., Section 469.175, Subd. 1, and M.S.,Section 469.176, Subd. 1,the duration of the District must be indicated within the TIF Plan. Pursuant to M.S., Section 469.176, Subd. Ib., the duration of the District will be 8 years after receipt of the first increment by the EDA. The date of receipt by the EDA of the first tax increment is expected to be 2018.Thus,it is estimated that the District,including any inodifications � of the TIF Plan for subsequent phases or other changes,would terminate after 2026, or when the TIF Plan � is satisfied. If increment is received in 2017,the term ofthe District will be 2025.The EDA reseives the right ' to decertify the District prior to the legally required date. i , Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworid) 2-3 i Subsection 2-8. Original Tax Capacity,Tax Rate and Estimated Captured Net Tax Capacity Value/Increment and Notification of Prior Planned Improvements Pursuant to M.S.,Section 469.174,Subd. 7 andM.S.,Section 469177,Subd.l,the Original Net Tax Capacity (ONTC)as certified for the District will be based on the market values placed on the property by the assessor in 2015 for taxes payable 2016. Pursuant to M.S., Section 469.177, Subds. 1 and 2,the County Auditor shall certify in each year(beginning in the payinent year 2018)the amount by which the original value has increased or decreased as a result of: 1. Change in tax exempt status of property; 2. Reduction or enlargement of the geographic boundaries of the district; 3. Change due to adjustments,negotiated or court-ordered abatements; 4. Change in the use of the property and classification; 5. Change in state law governing class rates; or 6. Change in previously issued building perinits. In any year in which the current Net Tax Capacity(NTC)value of the District declines below the ONTC,no value will be captured and no tax increment will be payable to the EDA. The original local tax rate for the District will be the local tax rate for taxes payable 2016, assuming the request for certification is made before June 30,2016. The ONTC and the Original Local Tax Rate for the District appear in the table below. Pursuant to M.S., Section 469.174 Subd. 4 and M.S., Section 469.177, Subd. 1, 2, and 4, the estimated Captured Net Tax Capacity(CTC)of the District, within Development District No. 1,upon completion of tlle projects within the District, will annually approximate taY increment revenues as shown in the table below.The EDA requests 100 percent ofthe a�ailable increase in taY capacity for repayment of its obligations and current expenditures,beginning in the tax year payable 2018.The Project Tax Capacity(PTC)listed is an estimate of values when the projects within the District are completed. Project Estimated Tax Capacity upon Completion(PTC) $80,902 Original Estimated Net Tax Capacity(ONTC) $4,650 Fiscal Disparities Contribution $26,879 Estimated Captnred Tax Capacity(CTC) $49,373 Original Local Tax Rate 1.12327 Pay 2015 Estimated Annual Tax Increment(CTC g Local Tax Rate) $55,460 Percent Retained by the EDA 100% Tax capacity includes a 3%inflation factor for the duration of the District. The tax capacity included in this chart is the estimated tax capacity of the District in year 9. The tax capacity of the District in year one is estimated to be$38,490. Pursuant to.M.S., Section 469.177, Subd. 4,the EDA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175,Subd. 4,with a listing of all properties within the District or alea of enlargement for which building permits have been issued during the eighteen(18)months immediately preceding approval of the Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworld) 2-4 TIF Plan by the municipality pursuant to M.S.,Section 469.175,Subd.3. The County Auditor shall increase , the original net tax capacity of the District by the net tax capacity of improvements for which a building i permit was issued. ; The City has reviewed the area to be inclucled in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the ', City. , Subsection 2-9. Sources of Revenue/Bonds to be Issued The costs outlined in the Uses of Funds will be financed pr•imarily through the annual collection of tax increments. The EDA reserves the right to incur bonds or other indebtedness as a result o�the TIF Plan. As pr•esently proposed,the projects within the District will be financed by a either a bond issue,pay-as-you-go ' note or interfund loan/transfer. Any refiuiding amounts will be deeined a budgeted cost without a formal TIF I Plan Modification. This provision does not obligate the EDA to incur debt. The EDA will issue bonds or ' incur other debt only upon the determination that such action is in the best interest of the EDA. The total estimated tax increment revenues for the District are sho n i w n the table below: SOURCES OF FUNDS TOTAL I TaY Increment $421,470 Interest $42,147 � TOTAL $463,617 ', The EDA may issue bonds(as defined in the TIF Act)secured in whole or in part with t�increments froin I the District in a m�imum principal amount of$377,276. Such bonds may be in the form of pay-as-you-go ; notes,revenue bonds or notes, general obligation bonds, or interfimd loans. This estimate of total bonded ( indebtedness is a ctunulative statement of authority under this TIF Plan as of the date of approval. ' ; Subsection 2-10. Uses of Funds ; Currently under consideration for the District is a proposal to.facilitate the construction of an approximately 'I 34,200 square foot warehouse,4,200 square foot office space,and 43,560 square foot greenhouse in the City. � The EDA has determined that it will be necessat•y to provide assistance to the project(s)for certain District � costs,as described. The EDA has studied the feasibility of the development or redevelopment of property i in and around the District. To facilitate the establislunent and developinent or redevelopinent of the Dish•ict, � this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the table on the ' following page. i � i ( , i � Cottage Grove Economic Development Authority I Tax Increment Financing Plan for Tax increment Financing District No.1-16(Gardenworld) 2-5 USES OF TAX INCREMENT FUNDS TOTAL LandBuilding Acquisition $50,000 Site Iinprovements/Preparation $150,000 Utilities $80,000 Other Qualifying Improvements $55,129 Administrative Costs(up to 10%) $42,147 PROJECT COST TOTAL $377,276 Interest $86,341 PROJECT AND INTEREST COSTS TOTAL $463,617 The total project cost,including financing costs(iilterest)listed in the table above does not exceed the total projected tax increments for the District as shown in Subsection 2-9. Estimated capital and administrative costs listed above are subject to change among categories by modification of the TIF Plan without hearings and notices as required for approval of the initial TIF Plan,so long as the total capital and administrative costs combined do not exceed the total listed above.Further,the EDA may spend up to 20 percent of the tax increments from the District for activities(described in the table above) located outside the botmdaries of the District but within the boundaries of the Project (including administrative costs, which are considered to be spend outside the District), subject to all other terms and conditions of this TIF Plan. Subsection 2-11. Fiscal Disparities Election Pursuant to M.S., Section 469.177, Subd. 3, the EDA may elect one of two methods to calculate fiscal disparities. If the calculations pursuant to M.S., Section 469.177, Subd. 3, clause b,(within the District)are followed,the following method of computation shall apply: (1) The original net tax capacity shall be determined befoNe the application of the fiscal disparity provisions of ChapteN 276A or 473F. The cu�rent net tax capacity shall exclude any fiscal dispa�^ity commeYcial-industrial net tax capacity increase between the oNiginal year and the czaNrent yea� fnultiplied by the fiscal dispa�^ity ratio dete�^nzined pursuant to M.S., Section 276A.06, subdivision 7 or M.S., Section 473F.08, subdivision 6. YVhere the oYiginal net tax capacity is equaZ to o�^g�^eateN than the cuYNent net tax capacity,the�e is no captuNed tax capacity and no tax incYement determination. Where the original tax capacity is less than the curNent tax capacity, the difference between the of�iginal net tax capacity and the current net tar capacity is the captured net tczx capacity. This anaount less any portion thereof which the authority has designated, in its tax incre�nent financing plan, to share with the local taxing districts is the retained captured net tax capacity of the authoNity. (2) The county auditoY shall exclude the retained captured net tax capacity of the authoYity fi�ona the net tax capacity of the local taxing distt^icts in determining local taxing district tax rates. The local tax Nates so determined aYe to be extended against the retained captured net tax capacity of the authority as well as the net tax capacity of the local tczxing districts. The tax generated by Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No. 1-16(Gardenworld) 2-6 the extension of the less of(A)the local taxing distNict tax�^ates or(B)the original local tax rate !, to the retained captuNed net tax capacity of the authority is the tax inc�^ement of the authority. I The EDA will choose to calculate�scal disparities by clause b. According to M.S., Section 469.177, Subd. 3: � I (c) The�nethod of computation of tax inc�^ement applied to a dist�ict pursuant to parag�^aph (a) or � (b) shall f•efnain the saine foi°the duration of the district, except that the governing body may elect to change its election fi°o�n the�nethod of coinputation in paYagi°aph (a) to the method in , paNagNaph (b). Subsection 2-12. Business Subsidies I Pursuant to M.S., Sectio�z 116J.993, Subd. 3,the following fonns of financial assistance are not considered , a business subsidy: ', (1) A business subsidy of less than$150,000; (2) Assistance that is generally available to all businesses or to a general class of similar businesses, 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 governtnent 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 M.S., Section 116J.552,S'ubd. 3; (5) Assistance provided for the sole pw•pose of renovating old or•decaying building stock or br•inging it up to code and assistance provided for designated historic preservation districts,provided that the assistance is equal to or less than 50%of the total cost; , (6) Assistance to provide job readiuess and training services if the sole purpose of the assistance is to ', provide those services; I, (7) Assistance for housing; (8) Assistance for pollution control or abatement,including assistance for a tax increment financing hazas�dous substance subdistrict as defined under M.S., Section 469.174, Subd. 23; (9) Assistance for energy conservation; (10) Tax reductions resulting from conformity with federal taY law; (11) Worlcers' compensation and unemployment compensation; � (12) Benefits derived froin regulation; (13) Indirect benefits derived from assistance to educational institutions; (14) Funds fi•om bonds allocated under 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 i Revenue Code of 1986,as amended through December 31, 1999; (15) Assistance for a collaboration between a Mimlesota higher education institution and a business; , (16) Assistance for a tax increment financing soils condition district as defined under M.S., Section ' 469.174, Subd. 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; � (18) General changes in tax increment financing law and other general tax law changes of a principally technical nature; (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local goverrunent agency; (20) Funds fi•om dock and what•f bonds issued by a seaway port authority; ( I Cottage Grove Economic Development Authority , Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworld) 2-7 ' (21) Business loans and loan guarantees of$150,000 or less; (22) Federal loan funds provided through the United States Department of Commerce,Economic Development Administration; and (23) Property taY abatements granted under M.S., Section 469.1813 to property that is subject to valuation under Minnesota Rules, chapter 8100. The EDA will comply with M.S., Sections 116J.993 to 116J.995 to the extent the tax increment assistance under this TIF Plan does not fall under any of the above exeinptions. Subsection 2-13. County Road Costs Pursualit to M.S., Section 469.175, Subd. 1 a,the county board may require the EDA to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increinent will,in the judgment of the county, substantially increase the use of county roads requiring construction of road improveinents or other road costs and if the road improveinents are not scheduled within the next five years under a capital improvelnent plail or within five years under another county plan. If the county elects to use increments to iinprove county roads,it lnust notify the EDA within forty-five days of receipt of this TIF Plan. In the opinion of the EDA and consultants,the proposed development outlined in this TIF Plan will have little or no impact upon couuty roads,therefore the TIF Plan was not forwarded to the county 45 days prior to the public hearing. The EDA is aware that the cotmty could claim that tax increment should be used for county roads, even after the public hearing. Subsection 2-14. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxing jurisdictions assumes that the redevelopment contemplated by the TIF Plan would occur without the creation of the District. However, the EDA has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for"test was not met: IMPACT ON TAX BASE Preliminary Estimated Captured 2015/Pay 2016 Tax Capacity(CTC) Percent of CTC Total Net Upon Completion to Entitv Total Tax Capacitv Washington County 279,157,332 49,373 0.0177% City of Cottage Grove 28,000,985 49,373 0.1763% ISD No. 833 93,984,883 49,373 0.0525% Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworld) 2-8 IMPACT ON TAX RATES , Pay 2015 Percent Potential Extension Rates of Total CTC Taxes i Washington County 0.301857 26.87% 49,373 14,904 , City of Cottage Grove 0.415914 37.03% 49,373 20,535 , ISD No. 833 0.356750 31.76% 49,373 17,614 Othet• 0.048758 434% 49373 2,407 Total 1.123278 100.00% 55,460 , The estimates listed above display the captured tax capacity when all construction is completed. The taY rate 'i used for calculations is the actual Pay 2015 rate. The total net capacity for the entities listed above are based I on actual Pay 2015 figtues. The District will be certified under the actual Pay 2016 rates and figures,which were unavailable at the time this TIF Plan was prepared. Pursuant to M.S. Section 469.175 Subd. 2(b): (1) Estimate of total taY increment. It is estimated that the total amount of tax increment that will be � generated over the life of the District is$421,470; (2) Probable impact of the District on cit�provided services and ability to issue debt. An impact of the ', District on police protection is not expected. The City police depai�tment does track all calls for ' service including property-type calls and crimes.With any addition of new r•esidents or businesses, ', police calls for service will be increased. New developments add an increase in traffic,and additional I overall demands to the call load.The City does not expect that the proposed development,in and of itself,will necessitate new capital investment. The probable impact ofthe District on fire protection is not expected to be significant. Typically new , buildings generate few calls,if any, and are of superior construction. ' The impact of the District on public infrastructure is expected to be minimal. The development is not expected to significantly impact any traffic movements in the area.Tlle current infrastructure for � sanitary sewer,stoi7n sewer and water will be able to handle the additional volume generated from , the proposed development. Based on the development plans,there are no additional costs associated '� with street maintenance, sweeping,plowing,lighting and sidewallcs. The development in the District is expected to contribute an as yet undetermined amount in sanitary sewer(SAC)and water(WAC) connection fees. � I The probable impact of any District general obligation tax increment bonds on the ability to issue debt for general fund purposes is expected to be miniinal. It is not anticipated that there will be any ; general obligation debt issued in relat'ron to this project, therefore there will be no impact on the City's ability to issue future debt or on the City's debt limit. � i (3) Estimated amount of tax increment attributable to school district levies. It is estimated that the � amount of tax increments over the life of the District that would be attributable to school district ' levies, assuming the school district's share of the total local tax rate for all taYing jurisdictions ' remained the same, is$133,859; � Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworld) 2-9 , (4) Estimated amount of tax increment attributable to coun levies. It is estimated that the amount of tax increments over the life of the District that would be attributable to county levies,assuming the county's share of the total local tax rate for all taxing jurisdictions remained the same,is$113,249; (5) Additional information requested by the countv or school district. The City is not aware of any standard questions in a county or school district written policy regarding tax increment districts and impact on county or school district services. The county or school district must request additional information pursuant to M.S. Section 469.175 Subd. 2(b) within 15 days after receipt of the tax increinent financing plan. No requests for additional information from the county or school district regarding the proposed developinent for the District have been received. Subsection 2-15.Supporting Documentation Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan inust contain identification and description of studies aud analyses used to inake the determination set forth in M.S. Section 469.175, Subd. 3, clause (b)(2) and the findings are required in the resolution approving the District. Following is a list of reports and studies on file at the City that support the EDA and City's findings: • Staff Report of March 2, 2005. Subsection 2-16. Definition of Tax Increment Revenues Pursuant to M.S.,Section 469.174,Subd. 25,t�increment revenues derived froin a tax increment financing district include all of the following potential revenue sources: 1. Taxes paid by the captured net tax capacity,but excluding any excess taxes,as computed under M.S., Section 469.177; 2. The proceeds from the sale or lease of property,tangible or illtangible,to the extent the property was purchased by the authority with tax increments; 3. Principal and interest received on loans or other advances inade by the authority with tax increments; 4. Interest or other inveshnent earnings on or from tax increments; 5. Repaymeilts or return of tax increments made to the Authority under agreements for districts for which the request for certification was inade after August 1, 1993; and 6. The market value homestead credit paid to the Atrthority under M.S., Section 273.1384. Subsection 2-17. Modifications to the District In accordance with M.S., Section 469.175, Subd. 4, any: 1. Reduction or enlargement of the geographic area of the District, if the reduction does not meet the requiremellts ofM.S., Section 469.175, Subd. 4(e); 2. Increase in ainount of bonded indebtedness to be incuned; 3. A determination to capitalize interest on debt if that determination was not a part of the original TIF Plan; 4. Increase in the portion of the captured net tax capacity to be retained by the EDA; 5. Increase inthe estiinate ofthe cost ofthe District,including administrative expenses,that will be paid or financed with tax increment from the District; or 6. Designation of additional property to be acquired by the EDA. Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No. 1-16(Gardenworld) 2-10 I ; shall be approved upon the notice and after the discussion,public hearing and findings required for approval ' of the original TIF Plan. , Pursuant to M.S., Section 469.175 Subd. 4(�,the geographic area of the District may be reduced,but shall I, not be enlarged after five years following the date of certification of the original net tax capacity by the j county auditor. If an economic development dish�ict is enlarged, the reasons and suppoi�ting facts for the j determination that the addition to the district meets the criteria of M.S., Section 469.174, Subd. 12 must be doculnented in writing and retained. The requirements of this paragraph do not apply if (1) the only modification is elimination of parcel(s) from the District and (2) (A) the cui�rent net tax capacity of the ' parcel(s)eliminated fi•om the District equals or exceeds the net tax capacity of those parcel(s)in the District's original net tax capacity or(B)the EDA agrees that,notwithstanding M.S., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. � The EDA must notify the County Auditor of any modification to the District. Modifications to the District ' in the form of a budget modification or an expansion of the boundaries will be recorded in the TIF Plan. , Subsection 2-18.Administrative Expenses ''� In accordance with M.S., Section 469.174, Subd. 14, administrative expenses means all expenditures of the � EDA,other than: '; 1. Amounts paid for the purchase of land; 2. Amounts paid to contractors or others providing materials and services,including architectural and I engineering seivices, directly connected with the plrysical developinent of the real property in the District; 3. Relocatioii benefits paid to or services provided for persons residing or Uusinesses located in the District; 4. Amounts used to pay principal or interest on,fiind a reserve for, or sell at a discount bonds issued pursuant to M.S., Section 469.178; or ', 5. Amounts used to pay other financial obligations to the extent those obligations were used to finance '� costs described in clauses(1)to(3). For disti•icts for which the request for certification were made before August l, 1979,or�after June 30, 1982, and before August 1,2001,adininish•ative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Puisuant to M.S., Section ', 469.176, Subd. 3, tax increment may be used to pay any authorized and documented administrative � expenses for the Dishict up to but not to exceed 10 per•cent of the total estimated tax increment expenditures authorized by the TIF Plan or the total tax increments,as defined by M.S., Section 469.174,Subd.25, clause (1),fi•oin the District,whichever is less. I For districts for which certification was requested after July 31,2001,no tax increinent may be used to pay , any administrative expenses for District costs which exceed ten percent of total estimated tax increment ', expenditures authorized by the TIF Plan or the total tax increments,as defined in M.S.,Section 469.1�4,Subd. 25, clause (1),from the District,whichever is less. i Pursuant to M.S., Section 469.176, Subd. 4h, tax increments inay be used to pay for the County's actual � administrative expenses incurred in connection with the District and are not subject to the percentage liinits ' ofM.S.,Section 469.176,Subd. 3. The county may require payment ofthose expenses by February 15 ofthe � year following the year the expenses were incurred. Cottage Grove Economic Development Authority � Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworld) 2-11 Pursuant to M.S., Section 469. 177, Subd. 11,the County Treasurer shall deduct an amount(currently .36 percent)of any increment distributed to the EDA and the County Treasurer shall pay the amount dedttcted to the State Coinmissioner of Management and Budget for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities'use of tax increinent financing. This amount may be adjusted annually by the Commissioner of Revenue. Subsection 2-19. Limitation of increment The taY increment pledged to the payment of bonds and interest thereon may be discharged and the District may be tenninated if sufficient funds ha�e been irrevocably deposited inthe debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payinent of the bonds at maturity or redemption date. Pursuant to M.S., Section 469.176, Subd. 6: if, after four yeaNs f�on� the date of cei tification of the o�iginal net tax capacity of the tax incNementfinancingdistrictpz�rsuanttoM.S.,Section469.177,nodemolition,rehabilitation o�renovation of property o�otheN site pYeparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or wate� systems, has been commenced on a parcel located within a tax increment financing dist�^ict by the authority oN by the owner of the paNcel in accordance with the tax incrementfinancing plan, no additional tax incYenaent nzay be taken fi^om that parcel, and the oNiginal net tax capacity of that paNcel sl�all be excluded fi^om the original net tax capacity of the tax increment financing dist�^ict. If the authority o�^ the owner of the parcel sZcbseqzcently co�nJnences demolition,Nehabilitation or�^enovation o�othersite p�epaNation on thatparcel including qualified improvement of a st�^eet adjacent to that pa�^cel, zn accordance with the tcrx ancYementfinancingplan,the authority shall certify to the county audito�that the activity has com�nenced and the county auditor shall certify the net tax capacity the�eof as most recently certified by the con�missione�^ofYevenue and add it to the original net tax capacity ofthe tax inc�^enzentfinancingdistrict.The counry audator nzust enfo�^ce the provisions ofthis subdivision. The authoYity must subnzit to the county auditor evidence that the Nequired activity has taken place for each parcel in the dist�^ict. The evidence for a paNcel mzcst be subnzitted by Feb�^ua�^y 1 of the fifth year following the year in which t1�e parcel was certified as included in the disti^ict. For purposes of this subdivision, qualified i�npNovements of a street aNe limited to (1) construction or opening of a new street, (2) �elocation of a stNeet, and(3)substantial�econst�^uction or Nebz�ilding of an existing street. The EDA or a property owner inust improve parcels within the District by approxiinately January 2020 and report such actions to the County Auditor. Subsection 2-20. Use of Tax Increment The EDA hereby detennines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1. To pay the principal of and interest on bonds issued to finance a project; 2. To finance,or otherwise pay the cost of redevelopment of the Developinent District No. 1 pt�rsuant to M.S., Sections 469.090 to 469.1082; 3. To pay for project costs as identified in the budget set forth in the TIF Plan; Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No. 1-16(Gardenworld) 2-�2 4. To finance, or otherwise pay for other purposes as provided in M.S., Section 469.176, Subd. 4; 5. To pay principal and interest on any loans,advances or other payments made to or on behalf of the � EDA or for the benefit of Development District No. 1 by a developer; 6. To finance or otherwise pay premiums and other costs for insurance or other security guaranteeing , the payment when due of principal of and interest on bonds pursuant to the TIF Plan or pursuant to ' M.S., Chapter 462C. M.S., Sections 469.152 thYoi�gh 469.165,and/or M.S., Sections 469.178; and � 7. To accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to M.S., ChapteN 462C, M.S., Sections 469.152 � through 469.165,and/or M.S., Sections 469.178. ; These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other I� purposes prohibited by M.S., Section 469.176, Subd. 4. TaY increments generated in the District will be paid by Washington County to the EDA for the Tax Increment Fund of said District. The EDA will pay to the developer(s)annually an alnoLint not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public ', improvements,demolition and relocation,site preparation,and administration. Remaining increment fitnds ', will be used for EDA administration(up to 10 percent)and for the costs of public improveinent activities i outside the District. Subsection 2-21. Excess Increments Excess increments,as defined in M.S., Section 469.176,Subd.2,shall be used only to do one or more of the ! following: , l. Prepay any outstanding bonds; 2. Discharge the pledge of tax increment for any outstanding bonds; I 3. Pay into an escrow account dedicated to the payment of any outstanding bonds; or 4. Return the excess to the County Auditor fo.r redistribution to the respective taxing jurisdictions in i proportion to their local tax rates. The EDA must speiid or rehun the excess increments under paragraph(c)within nine months after the end ' of the year. In addition,the EDA may,subject to the limitations set forth herein, choose to modify the TIF Plan in order to finance additional public costs in Development District No. 1 or the District. Subsection 2-22. Requirements for Agreements with the Developer � The EDA will review any proposal for private developinent to determine its conformance with the ; Development Prograsn and with applicable municipal ordinances and codes. To facilitate this effort, the �', following documents may be requested for review and approval: site plan, construction, mechanical, and elech•ical system drawings,landscaping plan,grading and stoi�n drainage plan,signage system plan,and any other drawings or narrative deemed necessary by the EDA to deinonstrate the conformance of the development with City plans and ordinances. The EDA may also use the Agreements to address other issues related to the development. i I Pursuant to M.S., Section 469.176, Subd. S, no more than 10 percent, by acreage, of the property to be acquired in the District as set forth in the TIF Plan shall at any time be owned by the EDA as a result of acquisition with the proceeds of bonds issued pursuant to M.S.,Section 469.178 to which tax increments fi�om i property acquired is pledged, unless prior to acquisition in excess of 10 percent of the acreage, the EDA � concluded an agreement for the development of the property acquired and which provides recourse for the j Cottage Grove Economic Development Authority Tax Increment Financing Pian for Tax Increment Financing District No.1-16(Gardenworld) 2-13 � EDA should the development not be completed. Subsection 2-23.Assessment Agreements Pursuant to M.S., Section 469.177, Szcbd. 8, the EDA may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and coinpleted improveinents for the duration of the District. The assessinent agreement shall be presented to the County Assessor who shall review the plans and specifications for the improveinents to be constructed,review the market value previously assigned to the land upon which the improvements are to be constructed and,so long as the ininimuin inarket value contained in the assessment agreement appears,in the judgment of the assessor,to be a reasonable estimate,the County Assessor shall also certify the minimum market value agreement. Subsection 2-24.Administration of the District Adlninistration of the District will be handled by the EDA Executive Director. Subsection 2-25.Annual Disclosure Requirements Pursuant to M.S.,Section 469.I75,Subds. 5, 6,and 6b the EDA must undertake financial reporting for all taY increment financing districts to the Office of the State Auditor, County Board and County Auditor on or before August 1 of each year. M.S.,Section 469.175,Subd. 5 also provides that an amlual stateinent shall be published in a newspaper of general circulation in the City on or before August 15. If the City fails to make a disclosure or submit a report containing the information required by M.S., Section 469.175 Subd. 5 and Subd. 6, the Office of the State Auditor will direct the County Auditor to withhold the distribution of tax increment from the District. Subsection 2-26. Reasonable Expectations As required by the TIF Act,in establishing the District,the deterinination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable firture and that the increased market value ofthe site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the inarket value estimated to result from the proposed developmel7t after subtracting the present value of the projected taY increments for the maxilnum duration ofthe District permitted by the TIF Plan.In making said determination, reliance has been placed upon written representation made by the developer to such effects and upon EDA and City staff awareness of the feasibility of developing the proj ect site(s)within the District. A comparative analysis of estiinated market vahies both with and without establislunent of the District and the use of tax increments has been perforined as described above. Such analysis is included with the cashflow in Appendix D,and indicates that the increase in estimated market value of the proposed development(less the indicated subtractions) exeeeds the estimated market value of the site absent the establishment of the District and the use of tax increments. Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No. 1-16(Gardenworld) 2-14 i i Subsection 2-27.Other Limitations on the Use of Tax Increment , � 1. General Limitations. All revenue derived froin tax increment shall be used in accordance with the TIF I Plan. The revenues shall be used to finance, or otherwise pay the cost of redevelopment of the ; Development District No. 1 pursuant to M.S.,Sections 469.090 to 469.1082.Tax increments may not be ', used to circumvent existing levy limit law. No tax increinent lnay be used for the acquisition, construction,renovation,operation,or maintenance of a building to be used primarily and regularly for � conducting the business of a municipality,county,school district,or any other local uiut of govermnent or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. �, 2. Poolin� Limitations. At least 80 percent of tax increments fi•om the District must be expended on activities in the District or to pay bonds,to the extent that the proceeds of the bonds were used to finance activities within said district or to pay,or secure payment of,debt service on credit enhanced bonds. Not , more than 20 percent of said tax increments may be expended,through a developinent fund or otherwise, �I on activities outside of the District except to pay,or secure payment of,debt service on credit ei�lianced bonds. For purposes of applying this restriction,all administrative expenses must be treated as if they were solely for activities outside of the District. 3. Five Year Limitation on Commitment of T�Increments. Tax increments derived from the District shall , be deemed to ha�e satisfied the 80 percent test set forth in paragraph(2)above only if the five year rule set forth ili M.S., Section 469.1763, Subd. 3, has been satisfied; and begimling with the sixth year following cei�tification of the District, 80 percent of said t�increments that remain after expenditures pei�rnitted under said five year rule must be used only to pay previously committed expenditures or credit enhanced bonds as more fully set forth in M.S., Section 469.1763, Subd. 5. ', Subsection 2-28. Summary The Cottage Grove Economic Development Authority is establishing the District to preserve and enhance the tax base,and provide employment oppol�tunities in the City. The TIF Plan for the District was prepared by , Ehlers&Associates,Inc.,3060 Centre Pointe Drive,Roseville,Mimlesota 55113-1105,telephone(651)697- ' 8500. i � I I Cottage Grove Economic Development Authority Tax Increment Financing Plan for Tax Increment Financing District No.1-16(Gardenworld) 2-15 Appendix A Project Description Gardenworld intends to acquire 9 acres of land in order to construct an approximately 34,200 square foot warehouse,4,200 square foot office and a 43,560 square foot greenhouse in the City. Appendix A-1 , esrH a�r_(os�a) :: ' � -. � � i i� �t i. _.___ ; � �attage � -;:� ;�. j _ 4 . ; . , o_ ;. .__ _ �_ '°?�_ ' _� , : _ .:._.. . �xo�ie ., o � :_ - -.�i i.. � ... �„��e�a�"a� � ;o , � ` �. R -- - 1 �: i ?OTH S (C.S.A.H.ZD) __ � �� ` � � , _ i . •S'��,� - � ' -- - _ - 'a �" - -',--:tMD1AN BLVD � " , ,.� x - ,_ : . .�_h : ..�� -� .� . ..._.. - � . 2 ' I __ _ - r _.r -• i'�� ' 1 _ I 77TN ST �� . — m�' -u»in� , . ,� __I 80TM87 _�.� , �.. Tax Increment Financin :�� _ �. . _ �, ,.� g , . , ,— - --- ' _ _.. � v :_ ; � � _. v . -a ,`�. � District No. 1-16 ` _: � - w , � � ! , a � --- � o ,`, � . � � _. ,, , �, �,, RI`+qr ::.�. . :.. � ' . I � , ❑ .. . %� '�..'�,. �1 . .. . ' Q ...... :. . . '.' . � ._ ' ,, � = --... +� --- -.... _. < ,:, � _ , .,, -- ;� ' ' � a ' . z � ` . . ___ ; ,� -; I - C �y O �. __. ti Q,11_ _ p _ _ _. � � _ , _ m , .-�1 , �'' , w°�� --- m ._. � � , ', � - . ;� g? ;----- _ ._. _. m D , - . 5�.�� . � _� .�..,,- � �.�:,. °� � -- --- — � � � I -. �,M�� :; I ;' � T _,.. r-.__. � _ i 0 � ' . . ,h.� ` �I � �:: _ __.. tn. ,�;, P �.�'� '�' ` � . ,..�-- ..- _ ;_ _._.. _.___ � Q � ` I ,. `. �� I-' - � i •�—�- X. .. �. . . _.._ .' "`' _.. � �'F � I * ivamar _ _ _ . . _.' � � . _ .. � . . � � , � .... .i ' ....:-.._ . ,.. W . �� ....'. ......... .. �� , � I'i�_..__.. I I ,� O � -........ ' a-� : . �..' : . . :. � ..'I, i .. . ..._._.. � � �] � i '. i .;.}.. ; . . J ; ' � � I . � � .� .I; � . .. .-. _ "______-____ ' . ' � � �.`_�` . ...... ... ........... .._.....__ . � �. . .._'""_'___._� ...._... .._ � _._. � .. . .. ., . � �. ._.. Q. �.... . ... ... . .. ,.. ., �.._'.I , �."i" � �fi . � i i � �. .... .'__" � , 110TH ST __ I CD .. Development District No. 1 ` _ . ' , " ;__. . _ ; i � 0 �?R�ey ..,. . _ � _ s� ; , . _ I ,,. . , , _ . � .� i �;, , ��ba�a ..:: ' 'I' ,. �' _ _ �'.�y'1y �. _ , . I . . , , f _ -____ �_______;_. _ . a - , (:, ;'i �. �� .. ,:, - , �. ., ; , _ . _....__._ „._.._. , �----� _ �'�i - :- -�: � , _ 0 800,600 3,200 Feol _ ___ .._. , � - -- ! - Tax Increment Financing District No. 1-16 Development District No. l City of Cottage Grove Washington County,Minnesota Appendix C Description of Property to be Inciuded in the District The District encompasses all property and adjacent rights-of-way and abutting i•oadways identified by the parcel listed below. Parcel Numbers Address Owner 20.027.21.44.0005 Wag Farms Inc Etal Appendix C-1 Appendix D Estimated Cash Flow for the District ' � ! I i � � Appendix D-1 j � 12/29/2015 Base Value Assumptio�s -Page 1 EHLERS 6[ABF.Fl$iw PuP6ie ritiRaF[ Garden World -3% Inflation City of Cottage Grove 34,200 sqlft warehouse,4,200 sqlft offce and 43560 sq/ft Greenhouse � � DistrictType: Economic Development Tax Rates District NamelNumber: County District#: �xempt Glase I�ate(�zetnpt) O.dtl% First Year Construction or Inflation on Value 2016 GofnmeFclal Induetffal f'fefeFPed Gless f�ate(C/I pref,} Existing District - Specify No.Years Remaining FiP�t $150,D00 9.50% Inflation Rate-Every Year: 3.00% Over $150,Do0 2.00% Interest Rate: a.00/ Comreerci�l Industrial Cl�ss�tete(G/l) �,00% Present Value Date: 1-Aug-16 aental Hausf�g Clase Rat�(Rental) 1.2�% First Period Ending 1-Feb-17 Afifordable�tent�l kodsing Cleas��te(Aff,aental) TaxYearDistrictwasCertifed: Pay2016 FIfSt S1DD,ODd D.7�% Cashflow Assumes First Tax Increment For Development: 2018 Over $100,000 0,$5% Years of Tax IncremeM 9 Nofi=Hom�steed Resldential(Non=b�Zes,1 l�fiit) Assumes Last Year of Tax Increment 2026 �iPst $6Dtl,bOtl 9.00% Fiscal Disparities Election[Outside(A), Inside(B),or NA] Inside(B) OVer $599,tiD9 1,�F% Incremental or Total Fiscal Disparities Incremental Homestead 12esidental Cless�tate(HmStd,�tes,) Fiscal Disparities Contribution Ratio 35.2503% Pay 2015 Fifst $50d,OD0 1.(1D% Fiscal Disparities Metro-Wide Tax Rate 161.6250% Pay 2015 bver $�00,000 1.�5% Maximum/Frozen Local Tax Rate: 112.327% Pay 2015 AgtIGuILUPaI Non-Wohtestead 1,D�% Current Local Tax Rate:(Use lesser of Current or Max.) 112.327% Pay 2015 State-wide Tax Rate(Comm./Ind.only used for total taxes) 50.8400% Pay 2015 � Market Value Tax Rate(Used for total taxes) 0.21396% Pay 2015 •' • � Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used �Nglll�l Original Tax Original After Conversion Areal Map# PID Owner Address Market Value Value Value for District IVf�rk6t Valu� Market Value Class Tax Capacity Conversion. Orig.Tax Cap. Phase . . . 1,903,300 0 1,903,300 14% Pay2016Ag Non-Homesteac 2,700 C/I Pref. 4,650 � _ _ _ ,;,, , 270 01d _ 2 7'00 d�60 Note: 1. Base values are for pay 2016 based upon conversations wi[h County Assessor on 10-14-15 2. Site is 63.44 acres and is located in SD 833,WS 14 and UTA 1904.Parcel to he platted for 9.084 acre site to be inciuded in the District. Prepared by Ehlers&Associates,Inc.-Estimates Only N:\Minnsota\Cottage Grove\Housing-Economic-RedevelopmenflTlF\TIF Districts\TIF 1-16(Garden World)2075\TIF Run For Plan-FINAL.xIs 12/29/2015 Base Value Assumptions -Page 2 :� EHLERS 6CADENS�p PL�Ql�6 tlN�taS� Garden World -3% Inflation Ciry of Cottage Grove 34,200 sq/ft warehouse,4,200 sq/ft office and 43560 sq/ft Greenhouse -• �- • Estimated Taxable �TotalTaxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes Area/Phase New Use Per Sq.Ft./Unit Per Sq,Ft.lUnit Sq.Ft./Units Value Class Tax Capacity Capacity/Unit 2016 2017 2018 2019 Payable 1 Warehouse 50 50 34,200 1,710,000 C/I Pref. 33,450 1 100% 100% 100% 100% 2018 1 Office 60 60 4,200 252,000 C/I 5,040 1 100% 100% 100% 100% 2018 2 Greenhouse 30 30 43,560 1,306,800 C/I 26,136 1 0% 100°/ 100% 100% 2019 TOTAL 3,268,800 6 ,6 6 Subtotal Residential D 0 0 SubtotalCommercial/Ind. 81,960 3,268,800 � 64626 Note: 1.Market values are based upon estimates from discussions with County Assessor on 8-31-15. . , � Total Fiscal Local Local Fiscal State-wide Market Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq,Ft./Unit Warehouse 33,450 11,791 21,659 24,329 19,058 17,006 3,659 64,D51 1.87 Office 5,040 1,777 3,263 3,666 2,871 2,562 539 9,639 2.29 Greenhouse 26 136 9 213 16 923 19 009 14,891 13,288 2,796 49,983 1.15 T A 6 ,626 22,781 41,845 4 ,003 36,620 32,856 6,994 123,673 Note: 1. Taxes and tax incremen[will vary signficantly from year Po year depending upon values,rates,state law,fiscai disparities and other facfors which cannot be predicted. 2. If tax increment in received in 2017,then the district will be one year shorter. � � '• •- Total Property Taxes 123,673 Current Market Value-Est. 270,014 Iess State-wide Taxes (32,856) New Market Value-Est. 3,268,8D0 less Fiscal Disp.Adj. (36,820) Difference 2.ggg,�gg less Market Value Taxes (6,994) Present Value of Tax Increment 326,712 less Base Value Taxes (3,382) Difference 2,672,074 Annual Gross TIF 43,621 Value likely to occur without Tax Increment is less than: Prepared by Ehlers 8 Associates,Inc.-Esfimates Only N:\Minnsota\Cottage Grove\Housing-Economic-RedevelopmenATIF�TIF Districts\TIF 1-16(Garden World)2015\TIF Run For Plan-FINAL.xIs 12/29/2015 Tax Increment Cashflow-Page 3 ��6�� Araarns�n runue n��nr+Gt Garden World - 3% Inflation City of Cottage Grove 34,200 sq/ft warehouse, 4,200 sq/ft office and 43560 sq/ft Greenhouse . , � Project Originai Fiscal Captured Local Annual Semi-Annual State Admin. Semi-Annual Semi-Annual PERIOD °/of 7ax 7ax Disparitte& 7ax Tax Gross 7ax Gross Tax Auditor at Net Tax Present ENDING Tax Payment OTC Ca 8ci Ca aCi incremental Ca aCi �ate fnCrement Increment 0.36% 1D% Increment Value Yrs. Year Date - - - - 02/01/17 - - - - 08/01l17 - - - - 02/01/18 100% 38,490 (4,650) (11,929) 21,911 112.327% 24,612 12,306 (44) (1,226) 11,036 10,195 0.5 2018 08/01/18 12,306 (44) (1,226) 11,036 20,190 1 2018 02/01/19 100% 65,781 (4,650) (21,549) 39,582 112.327% 44,461 22,231 (80) (2,215) 19,935 37,893 1.5 2019 08/01/19 22,231 (80) (2,215) 19,935 55,247 2 2019 02/01/20 100°/ 67,754 (4,650) (22,244) 40,860 112.327% 45,896 22,948 (83) (2,287) 20,579 72,811 2.5 2020 08/01/20 22,948 (83) (2,287) 20,579 90,031 3 2020 02/01/21 100% 69,787 (4,650) (22,961) 42,176 112.327% 47,375 23,687 (85) (2,360) 21,242 107,457 3.5 2021 OB/01/21 23,687 (85) (2,360) 21,242 124,541 4 2021 02/01/22 100% 71,880 (4,650) (23,699) 43,531 112.327% 48,897 24,449 (88) (2,436) 21,925 141,828 4.5 2022 08/01/22 24,449 (88) (2,436) 21,925 158,777 5 2022 02/01/23 100% 74,037 (4,650) (24,459) 44,928 112.327% 50,466 25,233 (91) (2,514) 22,628 175,926 5.5 2023 08/01/23 25,233 (91) (2,514) 22,628 192,738 6 2023 02/01/24 100% 76,258 (4,650) (25,242) 46,366 112.327% 52,081 26,041 (94) (2,595) 23,352 209,749 6.5 2024 08/01/24 26,041 (94) (2,595) 23,352 226,427 7 2D24 02/01/25 100% 78,546 (4,650) (26,048) 47,847 112.327% 53,745 26,873 (97) (2,678) 24,098 243,299 7.5 2025 08/01/25 26,873 (97) (2,678) 24,098 259,841 8 2025 02/01/26 100% 80,902 (4,650) (26,879) 49,373 112.327% 55,459 27,729 (100) (2,763) 24,867 276,575 8.5 2026 08/01/26 27 729 100 2,763 24,867 292,982 9 2026 02/01/27 ota 422,982 1,528 42,147 379,32 ' Pres�nt Velue From 08/01/2016 Present Velue Ret� d.00% 326,712 (1,176) (3�,664 292,982 ' Prepared by Ehlers&Associates,I�c.-Estimates Only N:\Minnsota\Cottage Grove\Housing-Economic-Redevelopment\TIF\TIF Districts\TIF 1-16(Garden Wodd)2015\TIF Run For Plan-FINALxIs Appendix E I � Minnesota Business Assistance Form (Minnesota Department of Employment and Economic Development) A Minnesota Business Assistance Form(MBAF)should be used to report and/or update each calendar year's '' activity by April 1 of the following year. Please see the Minnesota Department of Employment and Economic Developinent (DEED) website at http://www.deed.state.mn.us/Cominunitv/subsidies/MBAFForm.htm for information and forms. ', I I I I i , � � ( � Appendix E-1 ( Ili Appendix F Findings Including But/For Qualifications The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 1-16 as required pursuant to M.S.,Section 469.175,Subd.3 are as follows: 1. Finding that the Tcrx Incren�ent Financing District No. 1-16 is an economic develop�nent dist�^ict as defined in M.S., Section 469.174, Subd. 12. Tax Increment Financing District No. 1-16 is a contiguous geographic area witlun the City's Development District No. l,delineated in the TIF Plan,for the purpose of financing economic development in the City through the use of tax incremeilt. The District is in the public interest because it will facilitate the construction of an approximately 34,200 square foot warehouse, 4,200 square foot office space, and 43,560 square foot greenhouse which will preserve and enhance the tax base of the state. 2. Finding that the proposed development, in the opinion of tlte City Council, would not reasonably be expected to occur solely thr^ough pYivate investment within t1�e reasonablyfo�^eseeable future and that the increased market value of the site that could reasonably be expected to occu�^ withozct the use of tax increment financing woz�ld be less than the increase in the market value estimated to Nesult fi^om the p�^oposed development afte� subtracting the present value of the p�^ojected tax increments for the maxifnum duration of Tax IncYement Financing District No. 1-16 permitted by the TIF Plan. The proposed development, in the opinion of the City, would not�easonably be expected to occur solely throughp�ivate investmentwithin the�easonablyfo�eseeablefutuf�e:This finding is supported by the fact that the development proposed in this plan is a manufacturing(greenhouse) and warehouse facility for Gardenworld that ineets the City's objectives for economic development. The cost of land acquisition, site and public improvements and utilities makes development of the facility infeasible without City assistance. The inc�eased maNket value of the site that coz�ld Yeasonably be expected to occur without the use of tax inc�^ementfinancingwouldbe Zess than the increase in marketvalue estimatedto YesultfNom theproposed devel opm ent after subtracting the p�^esent value of th e projected tax incYements for the maxim zim duration ofthe TIFDistrictpeYmitted by the TIFPIan:The City supported this finding on the grounds that the cost of land acquisition, site and public improvements and utilities add to the total development cost. Historically,site developinent costs in this area ha�e made developineiit infeasible without tax increment � assistance.The City reasonably detennines that no other developinent of siinilar scope is anticipated on this site withoLrt substantially similar assistance being provided to the development. Therefore,the City coilcludes as follows: a. The City's estimate of the amount by which the market value of the entire District wi11 increase without the use of tax increment financing is$0. b. If the proposed developinent occurs,the total increase in market vahie will be$2,998,786. c. The present value of tax increments from the District for the inaximum dtiration of the district permitted by the TIF Plan is estilnated to be$326,712. d. Even if some development other than the proposed development were to occur,the Council finds that no alternative would occur that would produce a marlcet value increase greater than $2,672,074 (the amount in clause b less the amount in clause c) without tax increment Appendix F-� i assistance. 3. Finding that the TIF Plan fo��Tax Increnaent Financing District No. 1-16 confor�ns to the general plan for the development oN redevelopment of the municipality as a tivhole. The Planning Commission reviewed the TIF Plan and found that the TIF P1an conforms to the ' general development plan of the City. i 4. Finding that the Tax Increment Financing Plan for Tax Incre�nent Financing District No. 1-16 will ' afford maxi»aum oppoNtuniry, consistent with the sound needs of the City as a whole, for the '' development of Developinent DistYict No. 1 by pNivate enterpNise. II The project to be assisted by the District will r•esult in increased employment in the City and the State of Mimlesota,increased tax base of the State,and add a high quality development to the City. ; But For Analysis j Current Market Value 270,014 i New Market Value-Estimate 3,268,800 Difference 2,998,786 � Present Value of Tax Increment 326,712 ' Difference 2,672,074 '�i Value Likely to Occur Without TIF is Less Than: 2,672,074 I� i i I ; ( Appendix F-2 � I