EDA TIF Policy (2008)m
ECONOMIC DEVELOPMENT AUTHORITY
of the City of Crystal, Minnesota
Adopted: March 3, 2008
CRYSTAL ECONOMIC DEVELOPMENT AUTHORITY
Tax Increment Financing Policy
For the purpose of this policy, the "city" shall also mean the Crystal Economic Development
Authority (EDA), which serves in conducting various economic development, housing and
redevelopment programs and activities within the City of Crystal.
GENERAL POLICY
The purpose of this policy is to establish the City's position relating to the use of Tax Increment
Financing for private development. This policy shall be used as a guide in processing and
reviewing applications requesting Tax Increment assistance. The fundamental purpose of tax
increment financing in Crystal is to encourage desirable development and/or redevelopment that
would not otherwise occur "but for" the assistance provided through TIF.
The City of Crystal shall consider Tax Increment Financing for projects that serve to accomplish
the City's goals for housing and economic development as they may change over time. The goals
include facilitating projects that would result in the creation of quality jobs (e.g. stable
employment and/or attractive wages and benefits) and the attraction, retention, and expansion of
business and housing options in the City.
II. CITY'S OBJECTIVE FOR THE USE OF TIF:
As a matter of adopted policy, the City of Crystal will consider using Tax Increment Financing
(TIF) to assist private development projects to achieve one or more of the following purposes:
Remove blight and/or encourage redevelopment in the commercial and industrial areas of the
City in order to encourage high quality development or redevelopment and private
reinvestment in those areas.
• To achieve any of the following housing -related goals:
• to ensure all housing is safe and well maintained;
• to provide a balanced and sustainable housing stock to meet diverse needs both today
and in the future;
• to promote neighborhood stabilization and revitalization by the removal of blight and
the upgrading of existing housing stock.
0 To achieve the following general objectives:
• To retain local jobs and/or increase the number and diversity of quality jobs (e.g.
stable employment and/or attractive wages and benefits).
• To encourage additional unsubsidized private development in the area, either directly,
or through secondary "spin-off' development.
• To offset increased costs of redevelopment (e.g. contaminated site cleanup), over and
above those costs that a developer would incur in normal urban and suburban
development.
• To facilitate the development process and to achieve development on sites that would
not be developed without this assistance.
• To meet other public policies, as adopted by the EDA and City Council from time to
time, including promotion of quality urban design, energy conservation, decreasing
the capital and operating costs of local government, optimization of underutilized
properties etc.
111. COSTS WHICH QUALIFY FOR TAX INCREMENT FINANCING ASSISTANCE:
• Project design fees, including: utilities; landscape architectural and engineering design
• Site related work, including: permits for site work, earthwork/excavation, soil correction,
landscaping, utilities, streets and roads, street/parking lot paving, street/parking lot
lighting, curb and gutter, sidewalks
• Land acquisition
• Special assessments
• Legal fees (acquisition, finance, closing)
• Soil tests
Environmental studies
• Land surveys
• Park and open space dedication fees
• Interest rate write-downs
• Relocation assistance
• Replacement/cleanup of contaminated soils that would otherwise preclude redevelopment
• Rehabilitation
• Any other costs allowable by Statute
IV. PROJECTS WHICH MAY QUALIFY FOR TAX INCREMENT FINANCING
ASSISTANCE
All new TIF projects considered by the Crystal EDA must meet each of the following minimum
qualifications and also will be evaluated based on their ability to meet the desired qualifications
for assistance. However, it should not be presumed that a project meeting any of the
qualifications will be approved automatically. Meeting the qualifications creates no contractual
rights on the part of any potential developer to have its project approved.
MINIMUM QUALIFICATIONS
A. The project should meet one or more of the Tax Increment Financing Objectives outlined in
Section 2. But at a minimum shall:
• Remove blight and/or encourage high quality development or redevelopment and private
reinvestment.
• Facilitate the redevelopment process and achieve redevelopment on sites that would not
be redeveloped without this assistance.
B. The developer must demonstrate that the project is not financially feasible "but -for" the use
of tax increment financing.
C. The project must be consistent with the City's Comprehensive Plan and Zoning Ordinance, or
required changes to the plan and ordinances must be under active consideration by the City at
the time of final TIF application submittal.
•—A D. Prior to approval of a TIF financing plan, the developer shall provide any requested market
and financial feasibility studies, appraisals, soil boring, private lender commitment, and/or
other information the City or its financial consultants may require in order to proceed with an
independent underwriting of the proposal.
E. The developer must provide adequate financial guarantees to ensure the repayment of the TIF
loan and completion of the project. These may include, but are not limited to: assessment
agreements, letters of credit, personal deficiency guarantees, guaranteed maximum cost
contract, etc.
F. Any developer requesting TIF assistance should be able to demonstrate past successful
general development capability as well as specific capability in the type and size of
development proposed. TIF will not be used when the developer's credentials, in the sole
judgment of the City, are inadequate due to a track record relating to: completion of projects,
general reputation and/or bankruptcy, or other problems or issues considered relevant by the
City.
G. The developer should retain ownership of the project at least long enough to complete it, to
stabilize its occupancy, to establish the project management, and to initiate repayment of the
TIF loan.
DESIRED QUALIFICATIONS
A. TIF proposals creating a higher ratio of property taxes paid before and after
redevelopment will receive priority consideration. Given the different assessment
circumstances in the City, this ratio will vary widely. A 1:5 ratio of taxes paid before and
after redevelopment is desired, and a ratio of 1:2 is the absolute minimum that will be
considered.
B. TIF proposals normally should not be used to support speculative industrial, commercial,
office or housing projects. In general, the developer should be able to provide market
data, tenant letters of commitment or finance statements that support the market
potential/demand for the proposed project.
C. TIF normally will not be used in a project that involves an excessive land and/or property
price. This normally will be where the acquisition price is more than 20% in excess of
market value as determined by an independent appraisal of the property.
D. TIF will not be used in projects that would give a significant competitive financial
advantage over similar projects in the area due to the use of tax increment subsidies.
Developers should provide information to support that TIF assistance will not create such
a competitive advantage. Priority consideration will be given to projects that fill an unmet
market need.
E. TIF will be provided on a pay -as -you -go -basis. Any request for upfront assistance will be
evaluated on its own merit in accordance with the City's general financing policies.
Projects requesting pay-as-you-go financing will receive priority consideration.
F. TIF will not be used to support projects that place extraordinary demands on City
services. Preference will be given to projects that do not place extraordinary demands on
City services.
G. TIF will not be used for projects that would generate significant environmental problems
in the opinion of the local, state, or federal governments. Priority will be given to projects
that seek to clean-up existing contaminated sites and facilitate the location of an industry
or business that has an environmentally sound track record, or meet a housing need in the
City.
H. Preference will be given to projects that meet good public policy criteria as determined by
the EDA, including:
• High project quality (e.g. sound architectural design, quality construction and
materials);
• Projects that are in accord with the Comprehensive Plan, Zoning Ordinance and
redevelopment plans of the City;
• Projects that provide significant improvement to surrounding land uses, the
neighborhood, and/or the City;
• Projects that provide a significant increase in tax base;
• Projects that provide significant new, or retained, employment;
• Projects that meet financial feasibility criteria established by the City; and
• Projects that provide the highest and best desired use for the property.
V. TAX INCREMENT PROJECT EVALUATION PROCESS
The following five methods of analysis for all TIF proposals will be used:
1. Consideration of project meeting minimum qualifications.
2. Consideration of project meeting desired qualifications.
3. Project meets "but -for" analysis and statutory qualifications.
4. A project evaluation based on job creation, ratio of public to private investment, increase in
real estate value, project type, residential mix, etc.
5. Project is determined to be consistent with the City's Comprehensive Plan and applicable
redevelopment plans.
Please note that the evaluation methodology is intended to provide a balanced review. Each
area will be evaluated individually and collectively and in no case shall one area outweigh
^ another in terms of importance to determining the level of TIF assistance.
VI. APPLICATION FOR TIF ASSISTANCE FOR ALL TIF DISTRICTS AND
PROJECT AREAS
The City's tax increment financing program is administered by the Crystal EDA. The Crystal
EDA will require a non-refundable application fee in the amount of $2,000 for processing of the
application. The application fee shall be paid to the EDA at the time a final TIF application is
submitted.
At the time a final TIF application is submitted, the applicant shall also deposit $10,000 with the
EDA to cover its attorney's and consultants costs incurred as part of amending or establishing a
TIF district, drafting and negotiating a development agreement and conducting any fiscal analysis
that may be required to meet the requirements of utilizing TIF. If additional expenses are
incurred beyond the $10,000 prior to the execution of a development agreement, the EDA shall
notify the applicant in writing and the applicant will be required to deposit additional funds upon
notice.
If the project is approved and the applicant proceeds with the project, the EDA shall reimburse
the applicant any unused portion of the deposit as of the date of execution of the development
agreement. If the applicant does not proceed with the project, the EDA shall reimburse the
applicant for the unused portion of the deposit as of the date that the EDA is notified in writing
that the applicant desires to withdraw its application.
VII. APPLICATION PROCESS:
The application process is a two-step process and must be completed in accordance with the TIF
application procedures. The purpose of this approach is to give an applicant the opportunity to
present a development proposal without expending a great deal of money and time in pursuing a
development that may conflict with the City's goals and objectives.
VIII. OTHER POLICY ISSUES
Fiscal Disparities
It is the City's general policy to have tax increment financing districts contribute to fiscal
disparities in accordance with applicable State law. In the event a project cannot be completed as
a result of this election, the City may re-evaluate the impact of this policy on the project within
the framework of the Minnesota Statutes.
Loss of Government Aid
At any time, if the formation of a new TIF district or the use of an existing district to finance a
project will subject the City to an LGA/HACA penalty or local contribution to a project, the
transaction shall be structured so as to have the ultimate cost to the City minimized to the
--� greatest extent permitted by law, so as to have the project bear the cost of the penalty or
contribution.
Public Use of Tax Increment
The City shall follow applicable state laws in terms of potential public improvement financing
with TIF. It shall be the general policy of the City to identify public improvements at the time of
adoption or amendment of the TIF Plan.
PASSED AND DULY ADOPTED this day of 2008 by the
Crystal Economic Development Authority
President
Secret
ATTEST:
Vh J
City nager/EDA Exe tive/e Director