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HomeMy WebLinkAbout4.2_Attachment B_TIF Plan NorthPoint  Adoption Date: December 15, 2021 Cottage Grove Economic Development Authority City of Cottage Grove, Washington County, Minnesota MODIFICATION TO THE DEVELOPMENT PROGRAM Development District No. 1 & Tax Increment Financing (TIF) Plan Establishment of Tax Increment Financing District No. 1-20 (Northpoint Industrial) (an economic development district) BUILDING COMMUNITIES. IT’S WHAT WE DO. Prepared by: Ehlers 3060 Centre Pointe Drive Roseville, Minnesota 55113 TABLE OF CONTENTS Modification to the Development Program for Development District No. 1 1  FOREWORD 1  Tax Increment Financing Plan for Tax Increment Financing District No. 1-20 (Northpoint Industrial)2  FOREWORD 2  STATUTORY AUTHORITY 2  STATEMENT OF OBJECTIVES 2  DEVELOPMENT PROGRAM OVERVIEW 3  DESCRIPTION OF PROPERTY IN THE DISTRICT AND PROPERTY TO BE ACQUIRED 3  DISTRICT CLASSIFICATION 4  DURATION & FIRST YEAR OF DISTRICT’S TAX INCREMENT 6  ORIGINAL TAX CAPACITY, TAX RATE & ESTIMATED CAPTURED NET TAX CAPACITY VALUE/INCREMENT & NOTIFICATION OF PRIOR PLANNED IMPROVEMENTS 6  SOURCES OF REVENUE/BONDS TO BE ISSUED 8  USES OF FUNDS 8  FISCAL DISPARITIES ELECTION 9  ESTIMATED IMPACT ON OTHER TAXING JURISDICTIONS 10  SUPPORTING DOCUMENTATION 12  DISTRICT ADMINISTRATION 12  Appendix A: Map of Development District No. 1 and the TIF District A-1  Appendix B: Estimated Cash Flow for the District B-1  Appendix C: Findings Including But/For Qualifications C-1    Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 1 Modification to the Development Program for Development District No. 1 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 modification of the boundaries to be coterminous with the corporate boundaries of the City and the establishment of Tax Increment Financing District No. 1-20 (Northpoint Industrial). For further information, a review of the Development Program for Development District No. 1, is recommended. It is available from the Community Development Director at the City of Cottage Grove. Other relevant information is contained in the Tax Increment Financing Plans for the Tax Increment Financing Districts located within Development District No. 1.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 2 Tax Increment Financing Plan for Tax Increment Financing District No. 1-20 (Northpoint Industrial) FOREWORD The Cottage Grove Economic Development Authority (the "EDA"), and 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. 1-20 (Northpoint Industrial) (the "District"), an economic development tax increment financing district, located in Development District No. 1. STATUTORY AUTHORITY Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the EDA and City have certain statutory powers pursuant to Minnesota Statutes ("M.S."), Sections 469.090 - 469.1082, inclusive, 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 Financing Plan (the "TIF Plan") for the District. Other relevant information is contained in the Modification to the Development Program for Development District No. 1. STATEMENT OF OBJECTIVES The District currently consists of six (6) parcels of land and adjacent roads and internal rights-of-way. The District is being created to facilitate construction of approximately 3.44 million square feet of manufacturing/distribution facilities in the City. The EDA anticipates entering into an agreement with NP CG Logistics, LLC and development is likely to occur in the spring of 2022. This TIF Plan is expected to achieve many of the objectives outlined in the Development Program for Development District No. 1. The activities contemplated in the Modification to the Development Program and the TIF Plan do not preclude 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.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 3 DEVELOPMENT PROGRAM OVERVIEW Pursuant to the Development Program and authorizing state statutes, the EDA or City is authorized to undertake the following activities in the District: 1. Property to be Acquired - Selected property located within the District may be acquired by the EDA or City and is further described in this TIF Plan. 2. Relocation - Relocation services, to the extent required by law, are available pursuant to M.S., Chapter 117 and other relevant state and federal laws. 3. Upon approval of a developer's plan relating to the project and completion of the necessary legal requirements, the EDA or City may 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 or City may perform or provide for some or all necessary acquisition, construction, relocation, demolition, and required utilities and public street work within the District. 5. The City proposes both public and private infrastructure within the District. The proposed reuse of private property within the District will be for a manufacturing / distribution facilities, and there will be continued operation of Development District No. 1 after the capital improvements within Development District No. 1 have been completed. DESCRIPTION OF PROPERTY IN THE DISTRICT AND PROPERTY TO BE ACQUIRED The District encompasses all property and adjacent roads rights-of-way and abutting roadways identified by the parcels listed below. Parcel number Address Owner * 29.027.21.21.0001 N/A Joseph Zywiec 29.027.21.12.0001 N/A WAG Farms Inc. 29.027.21.11.0001 N/A Joseph Zywiec 29.027.21.11.0003 N/A RNR Kroll Prop. LLC 28.027.21.22.0002 N/A Eugene Smallidge 29.027.21.14.0002 N/A Todd Julen Note: Parcel 29.027.21.21.0001 is being subdivided, and approximately 50% of the parcel will be in the TIF District.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 4 Please also see the map in Appendix A for further information on the location of the District. The EDA or City may acquire any parcel within the District including interior and adjacent street rights of way. Any properties identified for acquisition will be acquired by the EDA or City 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 set forth in this plan. The EDA or City may acquire property by gift, dedication, condemnation or direct purchase 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. DISTRICT CLASSIFICATION The EDA or 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, finds that the District, to be established, is an economic development district pursuant to M.S., Section 469.174, Subd. 12. The District is in the public interest because it will meet the statutory requirement of discouraging commerce, industry, or manufacturing from moving their operations to another state or municipality; resulting in increased employment in the State; and resulting in preservation and enhancement of the tax base of the State. Pursuant to M.S., Section 469.176, Subd. 4c, revenue derived from tax increment from an economic development district may not be used to provide improvements, loans, subsidies, grants, interest rate subsidies, or assistance in any form to developments consisting of buildings and ancillary facilities, if more than 15 percent of the buildings and facilities (determined on the basis of square footage) are used for a purpose other than: (1) The manufacturing or production of tangible personal property, including processing resulting in the change in condition of the property; (2) Warehousing, storage, and distribution of tangible personal property, excluding retail sales; (3) Research and development related to the activities listed in items (1) or (2);   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 5 (4) Telemarketing if that activity is the exclusive use of the property; (5) Tourism facilities; (6) Space necessary for and related to the activities listed in items (1) to (5); or (7) A workforce housing project that satisfies the requirements of M.S., Section 469.176, Subd. 4c(d). In meeting the statutory criteria the City relies on the following facts and findings: The facilities in the District meet the conditions of Purposes 1, 2, 3 and 6. 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 parcel or a part of a parcel that qualified under the provisions of M.S 273.111 or 273.112 or Chapter 473H for taxes payable in any of the five calendar years before filing of the request for certification only for: (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. 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 personal 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. A manufacturing 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. To be a qualified facility, the owner or operator of a manufacturing facility must agree 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.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 6 The District does contain three (3) parcels that qualified under the provisions of § 273.111 or 273.112 or Chapter 473H for taxes payable in any of the five calendar years before the filing of the request for certification of the District (parcels are noted in the cashflow in Appendix B). The facilities to be assisted by the District are manufacturing and distribution facilities 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. DURATION & FIRST YEAR OF DISTRICT’S TAX INCREMENT 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. 1b., the duration of the District will be 8 years after receipt of the first increment by the EDA or City. The date of receipt by the City of the first tax increment is expected to be 2024. Thus, it is estimated that the District, including any modifications of the TIF Plan for subsequent phases or other changes, would terminate after 2032, or when the TIF Plan is satisfied. If increment is received in 2023, the term of the District will be 2031. The EDA or City reserves the right to decertify the District prior to the legally required date. ORIGINAL TAX CAPACITY, TAX RATE & ESTIMATED CAPTURED NET TAX CAPACITY VALUE/INCREMENT & NOTIFICATION OF PRIOR PLANNED IMPROVEMENTS Pursuant to M.S., Section 469.174, Subd. 7 and M.S., Section 469.177, Subd. 1, 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 2021 for taxes payable 2022. Pursuant to M.S., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2024) 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 permits.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 7 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 or City. The original local tax rate for the District will be the local tax rate for taxes payable 2022, assuming the request for certification is made before June 30, 2022. 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 the projects within the District, will annually approximate tax increment revenues as shown in the table below. The EDA and City request 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2024. 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 4,790,194 Original estimated Net Tax Capacity 54,039 Fiscal Disparities 1,578,717 Estimated Captured Tax Capacity 3,157,438 Original Local Tax Rate 103.3026% Pay 2021 Estimated Annual Tax Increment $3,261,716 Percent Retainted by the City 100% Project Tax Capacity Note: Tax capacity includes a 3.00% 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 $775,275. Pursuant to M.S., Section 469.177, Subd. 4, the EDA shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to M.S., Section 469.175, Subd. 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the TIF Plan by the municipality pursuant to M.S., Section 469.175, Subd. 3. The County Auditor shall increase the original net tax capacity of the District by the net tax capacity of improvements for which a building permit was issued.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 8 The EDA and City have reviewed the area to be included in the District and found no parcels for which building permits have been issued during the 18 months immediately preceding approval of the TIF Plan by the City. SOURCES OF REVENUE/BONDS TO BE ISSUED The total estimated tax increment revenues for the District are shown in the table below: SOURCES Tax Increment 21,270,134$ Interest 2,127,013 TOTAL 23,397,147$ The costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The EDA or City reserves the right to incur bonds or other indebtedness as a result of the TIF Plan. As presently proposed, the projects within the District will be financed by bonds, pay-as- you-go notes and interfund loans. Any refunding amounts will be deemed a budgeted cost without a formal TIF Plan Modification. This provision does not obligate the EDA or City to incur debt. The EDA or City will issue bonds or incur other debt only upon the determination that such action is in the best interest of the City. The EDA or City may issue bonds (as defined in the TIF Act) secured in whole or in part with tax increments from the District in a maximum principal amount of $18,699,020. Such bonds may be in the form of pay-as-you-go notes, revenue bonds or notes, general obligation bonds, or interfund loans. This estimate of total bonded indebtedness is a cumulative statement of authority under this TIF Plan as of the date of approval. USES OF FUNDS Currently under consideration for the District is a proposal to facilitate construction of approximately 3.44 million square feet of manufacturing/distribution facilities. The EDA and City have determined that it will be necessary to provide assistance to the project(s) for certain District costs, as described.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 9 The EDA has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this TIF Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the following table. USES Land/Building Acquisition 100,000$ Site Improvements/Preparation 10,000,000 Utilities 3,000,000 Other Qualifying Improvements 3,472,007 Administrative Costs (up to 10%)2,127,013 PROJECT COSTS TOTAL 18,699,020$ Interest 4,698,127 PROJECT AND INTEREST COSTS TOTAL 23,397,147$ The total project cost, including financing costs (interest) listed in the table above does not exceed the total projected tax increments for the District as shown in the Sources of Revenue section. 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 or City may spend up to 20 percent of the tax increments from the District for activities (described in the table above) located outside the boundaries 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. FISCAL DISPARITIES ELECTION Pursuant to M.S., Section 469.177, Subd. 3, the EDA or City may elect one of two methods to calculate fiscal disparities. The EDA will choose to calculate fiscal disparities by clause b (inside). Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 10 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 or City 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: Entity 2020/Pay 2021 Total Net Tax Capacity Estimated Captured Tax Capacity (CTC) upon completion Percent of CTC to Entity Total Washington County 379,355,049 3,157,438 0.8323% City of Cottage Grove 39,918,539 3,157,438 7.9097% ISD 833 131,265,458 3,157,438 2.4054% Impact on Tax Base Entity Pay 2021 Extension Rate Percent of Total CTC Potential Taxes Washington County 27.4354%26.56% 3,157,438 $ 866,255 City of Cottage Grove 37.3507%36.16% 3,157,438 1,179,325 ISD 833 34.1815%33.09% 3,157,438 1,079,259 Other 4.3350%4.20% 3,157,438 136,875 103.3026% 100.00% $ 3,261,716 Impact on Tax Rates The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the Pay 2021 rate. The total net capacity for the entities listed above are based on Pay 2021 figures. The District will be certified under the Pay 2022 rates, 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 tax increment. It is estimated that the total amount of tax increment that will be generated over the life of the District is $21,270,134;   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 11 (2) The probable impact of the District on fire protection is not expected to be significant. Typically new buildings generate few calls, if any, and are of superior construction. The City does not expect that the proposed development, in and of itself, will necessitate new capital investment in vehicles or facilities. The impact of the District on public infrastructure is expected to be significant. The Developer is required to pay for and install all new required public roadways, accesses, traffic signals and turn lanes in addition to extend and sanitary sewer or water lines to service the development. 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 minimal. It is not anticipated that there will be any general obligation debt issued in relation 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. (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 taxing jurisdictions remained the same, is $7,038,013; (4) Estimated amount of tax increment attributable to county 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 $5,648,979; (5) Additional information requested by the county 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 increment financing plan. No requests for additional information from the county or school district regarding the proposed development for the District have been received.   Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) 12 SUPPORTING DOCUMENTATION Pursuant to M.S. Section 469.175, Subd. 1 (a), clause 7 the TIF Plan must contain identification and description of studies and analyses used to make 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. (i) In making said determination, reliance has been placed upon (1) written representation made by the developer to such effects, (2) review of the developer’s proforma; and (3) City staff awareness of the feasibility of developing the project site within the District, which is further outlined in the City Council resolution approving the establishment of the TIF District and Appendix C. (ii) A comparative analysis of estimated market value both with and without establishment of the TIF District and the use of tax increments has been performed. Such analysis is included with the cashflow in Appendix B and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the TIF District and the use of tax increments. DISTRICT ADMINISTRATION Administration of the District will be handled by the Community Development Director. Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) A-1 Appendix A: Map of Development District No. 1 and the TIF District Development District No. 1 Tax Increment Financing District No. 1-20 TIF Development Districts ± Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) B-1 Appendix B: Estimated Cash Flow for the District 11/2/2021Northpoint Development - No InflationCity of Cottage Grove, MN 3,440,600 Sq. Ft. IndustrialASSUMPTIONS AND RATESDistrictType:Economic DevelopmentDistrict Name/Number:County District #:Exempt Class Rate (Exempt)0.00%First Year Construction or Inflation on Value2022Commercial Industrial Preferred Class Rate (C/I Pref.)Existing District - Specify No. Years RemainingFirst $150,0001.50%Inflation Rate - Every Year:3.00%Over $150,0002.00%Interest Rate:4.00%Commercial Industrial Class Rate (C/I)2.00%Present Value Date:1-Aug-22Rental Housing Class Rate (Rental)1.25%First Period Ending1-Feb-23Affordable Rental Housing Class Rate (Aff. Rental)Tax Year District was Certified:Pay 2021First $174,000 0.75%Cashflow Assumes First Tax Increment For Development: 2024 Over $174,000 0.25%Years of Tax Increment 9 Non-Homestead Residential (Non-H Res. 1 Unit)Assumes Last Year of Tax Increment2032First $500,0001.00%Fiscal Disparities Election [Outside (A), Inside (B), or NA]Inside(B)Over $500,0001.25%Incremental or Total Fiscal DisparitiesIncrementalHomestead Residential Class Rate (Hmstd. Res.)Fiscal Disparities Contribution Ratio33.3333% Pay 2021 First $500,0001.00%Fiscal Disparities Metro-Wide Tax Rate139.5040% Pay 2021 Over $500,0001.25%Maximum/Frozen Local Tax Rate: 103.303% Pay 2021 Agricultural Non-Homestead1.00%Current Local Tax Rate: (Use lesser of Current or Max.)103.303%Pay 2021 State-wide Tax Rate (Comm./Ind. only used for total taxes)35.9780% Pay 2021 Market Value Tax Rate (Used for total taxes)0.31905% Pay 2021 Building Total PercentageTax Year Property CurrentClassAfterLand Market Market Of Value Used Original OriginalTaxOriginalAfterConversionMap ID PIDOwnerAddress Market Value ValueValue for District Market Value Market Value Class Tax Capacity Conversion Orig. Tax Cap.129.027.21.21.0001Joseph Zywiec773,100773,10050% 386,550 Pay 2021Ag Non-Homestead3,866 C/I Pref.6,981 1229.027.21.12.0001WAG Farms Inc.792,800792,800100% 792,800 Pay 2021Ag Non-Homestead7,928 C/I Pref.15,106 1 & 2329.027.21.11.0001Joseph Zywiec465,300465,300100% 465,300 Pay 2021Ag Non-Homestead4,653 C/I Pref.8,556 2 & 3429.027.21.11.0003RNR Kroll Prop. LLC280,100 280,100 100% 280,100 Pay 2021Ag Non-Homestead2,801 C/I Pref.4,852 3 & 4528.027.21.22.0002Eugene Smallidge494,800494,800100% 494,800 Pay 2021Ag Non-Homestead4,948 C/I Pref.9,146 5629.027.21.14.0002Todd Julen175,800 331,600 507,400100%507,400 Pay 2021 Hmstd. Res.5,093 C/I Pref.9,398 52,981,900 331,600 3,313,5002,926,95029,28854,039Note:1. Base values are for taxable market value for Green Acres parcels for pay 22.2.Located in SD # 833 and S. Washington WSArea/ PhaseTax Rates BASE VALUE INFORMATION (Original Tax Capacity)Prepared by Ehlers 11/2/2021Northpoint Development - No InflationCity of Cottage Grove, MN 3,440,600 Sq. Ft. IndustrialEstimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First YearMarket Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full TaxesBuilding New Use Per Sq. Ft./Unit Per Sq. Ft./Unit Sq. Ft./UnitsValue Class Tax Capacity Capacity/Unit 2022 2023 2024 2025 Payable1 Industrial (PH 1, P2) 60 60 281,00016,860,000 C/I Pref. 336,450 1 50% 75%100% 100% 20262 Industrial (Ph 1, P2) 60 60 493,00029,580,000 C/I Pref. 590,850 1 50% 75%75% 100% 20273 Industrial (Ph 1, P3) 60 60 520,00031,200,000 C/I Pref. 623,250 1 50% 75%75% 100% 20274 Industrial (Ph 2, P4) 60 60 446,00026,760,000 C/I Pref. 534,450 1 0% 50%75% 100% 20275 Industrial (Ph 3, P3) 60 60 470,60028,236,000 C/I Pref. 563,970 1 0% 0%50% 100% 20276 Industrial (Ph 2, P4) 60 60 284,00017,040,000 C/I Pref. 340,050 1 0% 50%75% 100% 20277 Industrial (Ph 3, P1) 60 60 207,00012,420,000 C/I Pref. 247,650 1 0% 0%50% 100% 20278 Industrial (Ph 4, P5) 60 60 397,00023,820,000 C/I Pref. 475,650 1 0% 0%0% 100% 20279 Industrial (Ph 4, P5) 60 60 342,00020,520,000 C/I Pref. 409,650 1 0% 0%0% 100% 2027TOTAL206,436,000 4,121,970 Subtotal Residential 0 0 0 Subtotal Commercial/Ind. 3,440,600 206,436,000 4,121,970 Note:29,280,0001. Market values are based upon estimates from County Assessor.2. All property currently in Ag status so only qualified manufacturing or distribution allowed. Must pay 90% of employees 160% of Federal Minimum Wage.Total Fiscal Local Local Fiscal State-wide MarketTax Disparities Tax Property Disparities PropertyValue Total Taxes PerNew Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq. Ft./UnitIndustrial (PH 1, P2) 336,450 112,150 224,300 231,708 156,454 120,50853,791 562,461 2.00Industrial (Ph 1, P2) 590,850 196,950 393,900 406,909 274,753 212,03694,374 988,072 2.00Industrial (Ph 1, P3) 623,250 207,750 415,500 429,223 289,819 223,69399,542 1,042,277 2.00Industrial (Ph 2, P4) 534,450 178,150 356,300 368,067 248,526 191,74585,376 893,715 2.00Industrial (Ph 3, P3) 563,970 187,990 375,980 388,397 262,253 202,36590,086 943,102 2.00Industrial (Ph 2, P4) 340,050 113,350 226,700 234,187 158,128 121,80454,365 568,484 2.00Industrial (Ph 3, P1) 247,650 82,550 165,100 170,553 115,160 88,560 39,625 413,898 2.00Industrial (Ph 4, P5) 475,650 158,550 317,100 327,573 221,183 170,59075,997 795,342 2.00Industrial (Ph 4, P5) 409,650 136,550 273,100 282,120 190,493 146,84465,468 684,924 2.00TOTAL 4,121,970 1,373,989 2,747,981 2,838,736 1,916,769 1,478,145 658,624 6,892,274Note: 1. Taxes and tax increment will vary significantly from year to year depending upon values, rates, state law, fiscal disparities and other factors which cannot be predicted.2. If tax increment in received in 2023, then the district will be one year shorter.Total Property Taxes 6,892,274Current Market Value - Est. 2,926,950less State-wide Taxes (1,478,145)New Market Value - Est. 206,436,000less Fiscal Disp. Adj. (1,916,769) Difference 203,509,050less Market Value Taxes (658,624)Present Value of Tax Increment 16,107,981less Base Value Taxes (37,216) Difference 187,401,069Annual Gross TIF 2,801,520Value likely to occur without Tax Increment is less than:187,401,069 WHAT IS EXCLUDED FROM TIF? MARKET VALUE BUT / FOR ANALYSISTAX CALCULATIONSPROJECT INFORMATION (Project Tax Capacity)Prepared by Ehlers 11/2/2021Tax Increment Cashflow - Page 3Northpoint Development - No InflationCity of Cottage Grove, MN 3,440,600 Sq. Ft. IndustrialTAX INCREMENT CASH FLOWProject Original Fiscal CapturedLocal Annual Semi-AnnualStateAdmin.Semi-Annual Semi-Annual PERIOD% of TaxTax Disparities TaxTax Gross Tax Gross TaxAuditoratNet Tax Present ENDING Tax PaymentOTC Capacity Capacity Incremental CapacityRate Increment Increment0.36%10% Increment Value Yrs. Year Date---- 02/01/23---- 08/01/23---- 02/01/24100% 775,275 (54,039) (240,412) 480,824 103.303% 496,704 248,352 (894)(24,746)222,712 205,752 0.5 2024 08/01/24100% 775,275 (54,039) (240,412) 480,824 103.303% 496,704 248,352 (894)(24,746)222,712 407,469 1 2024 02/01/25100% 1,600,163 (54,039) (487,134) 1,058,990 103.303% 1,093,964 546,982 (1,969)(54,501)490,511 843,029 1.5 2025 08/01/25100% 1,600,163 (54,039) (487,134) 1,058,990 103.303% 1,093,964 546,982 (1,969)(54,501)490,511 1,270,049 2 2025 02/01/26100% 2,308,710 (54,039) (732,408) 1,522,263 103.303% 1,572,537 786,269 (2,831)(78,344)705,094 1,871,840 2.5 2026 08/01/26100% 2,308,710 (54,039) (732,408) 1,522,263 103.303% 1,572,537 786,269 (2,831)(78,344)705,094 2,461,831 3 2026 02/01/27100% 4,132,064 (54,039) (1,359,340) 2,718,684 103.303% 2,808,472 1,404,236 (5,055)(139,918)1,259,263 3,494,865 3.5 2027 08/01/27100% 4,132,064 (54,039) (1,359,340) 2,718,684 103.303% 2,808,472 1,404,236 (5,055)(139,918)1,259,263 4,507,643 4 2027 02/01/28100% 4,256,025 (54,039) (1,400,661) 2,801,326 103.303% 2,893,842 1,446,921 (5,209)(144,171)1,297,541 5,530,745 4.5 2028 08/01/28100% 4,256,025 (54,039) (1,400,661) 2,801,326 103.303% 2,893,842 1,446,921 (5,209)(144,171)1,297,541 6,533,787 5 2028 02/01/29100% 4,383,706 (54,039) (1,443,221) 2,886,446 103.303% 2,981,774 1,490,887 (5,367)(148,552)1,336,968 7,547,041 5.5 2029 08/01/29100% 4,383,706 (54,039) (1,443,221) 2,886,446 103.303% 2,981,774 1,490,887 (5,367)(148,552)1,336,968 8,540,428 6 2029 02/01/30100% 4,515,217 (54,039) (1,487,058) 2,974,120 103.303% 3,072,344 1,536,172 (5,530)(153,064)1,377,577 9,543,919 6.5 2030 08/01/30100% 4,515,217 (54,039) (1,487,058) 2,974,120 103.303% 3,072,344 1,536,172 (5,530)(153,064)1,377,577 10,527,733 7 2030 02/01/31100% 4,650,674 (54,039) (1,532,210) 3,064,425 103.303% 3,165,630 1,582,815 (5,698)(157,712)1,419,405 11,521,543 7.5 2031 08/01/31100% 4,650,674 (54,039) (1,532,210) 3,064,425 103.303% 3,165,630 1,582,815 (5,698)(157,712)1,419,405 12,495,866 8 2031 02/01/32100% 4,790,194 (54,039) (1,578,717) 3,157,438 103.303% 3,261,716 1,630,858 (5,871)(162,499)1,462,488 13,480,079 8.5 2032 08/01/32100% 4,790,194 (54,039) (1,578,717) 3,157,438 103.303% 3,261,716 1,630,858 (5,871)(162,499)1,462,488 14,444,993 9 2032 02/01/33 Total21,346,983 (76,849)(2,127,013) 19,143,120 Present Value From 08/01/2022 Present Value Rate 4.00%16,107,981 (57,989)(1,604,999) 14,444,993 Prepared by Ehlers & Associates, Inc. - Estimates OnlyN:\Minnsota\Cottage Grove\Housing - Economic - Redevelopment\TIF\TIF Districts\TIF 20-Northpointe Industrial\Cashflow\TIF Run 10-15-21 - FINAL Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) C-1 Appendix C: 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. 1-20 (Northpoint Industrial) as required pursuant to M.S., Section 469.175, Subd. 3 are as follows: 1. Finding that Tax Increment Financing District No. 1-20 (Northpoint Industrial) is an economic development district as defined in M.S., Section 469.174, Subd. 12. Tax Increment Financing District No. 1-20 (Northpoint Industrial) 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 construction of approximately 3.44 million square feet of manufacturing/distribution facilities. in the City which will increase employment in the State and 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 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 result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of Tax Increment Financing District No. 1-20 (Northpoint Industrial) permitted by the TIF Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the development proposed in this plan are manufacturing and distribution facilities that meets the City's objectives for economic development and land use designation within the City’s Comprehensive Plan. The cost of land acquisition and required street and utility improvements necessary to maximize development potential, makes development of the facilities infeasible without City assistance. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance. Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) C-2 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 market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan: The City supported this finding on the grounds that the project includes manufacturing/distribution facilities and the costs of land acquisition and required street and utility improvements necessary to maximize development potential, makes development of the facilities infeasible without City assistance. The City reasonably determines 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 $203,509,050 (see Appendix B of the TIF Plan) 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 $16,107,981 (see Appendix B of the TIF Plan). 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 $187,401,069 (the amount in clause b less the amount in clause c) without tax increment assistance. 3. Finding that the TIF Plan for Tax Increment Financing District No. 1-20 (Northpoint Industrial) conforms to the general plan for the development or redevelopment of the municipality as a whole. The City Council reviewed the TIF Plan and found that the TIF Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 1-20 (Northpoint Industrial) 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. Cottage Grove Economic Development Authority Tax Increment Financing District No. 1-20 (Northpoint Industrial) C-3 The project 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 high-quality development to the City.