78-21
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CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTIES, MINNESOTA
RESOLUTION
Date:
May 1, 1978
Resolution:
78-21
Motion by Councilman: Neveaux
Geving
Seconded by Councilman:
ESTABLISHMENT OF INDUSTRIAL REVENUE BOND CRITERIA
WHEREAS, the Minnesota Industrial Development Act is
designed to:
1)
Prevent the emergency or continuance of blighted and
marginal lands.
2)
Aid in increasing employment.
c)
Increase the Tax Base of a municipality and other taxing
authorities.
4)
Protect existing jobs by discouraging migration of
Minnesota firms to other states.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of
the dty of Chanhassen, that the following criteria are hereby adopted
as guidelines in considering requests for commercial and industrial
revenue bonds:
Minimum Fiscal Criteria
1)
Only new construction or plant expansion amounting to
$500,000 or more would be eligible for financing.
2)
The average earnings of applicants for the three (3) year
period prior to application shall be a minimum of 1-1/2 times
fixed charges. For the purposes of the computation of this
ratio "earnings" represent income before taxes on income
and fixed charges. "Fixed Charges" include industrial
revenue financing interest expense as well as all other
interest on other debt, lease obligations and other re-
curring annual fixed charges and expenses. For example,
interest on a $1 million dollar bond issue at 7% is $70,000.
If the applicant had $100,000 in other interest expense and
$50,000 in lease and other recurring expenses (total $220,000),
the average earnings for the past three years before income
taxes and fixed charges shall equal or exceed $330,000.
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3)
The annual fair market rental value of the building to be
constructed must equal or exceed the total amount of annual
principal and interest due on the industrial revenue financing.
An appraisal may be required to verify fair market rental
value for commercial development issues. The type of financing
shall be a mortgage revenue note which will be sold only to
an instititutional investor. This method of sale shall also
be established for industrial revenue bonds; however, the
city may waive this requirement for industrial revenue bonds
upon the advice of the city staff and fiscal consultant.
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4)
The net worth of the applicant as reflected by its balance
sheet for the fiscal year immediately preceeding application
shall equal or exceed outstanding indebtedness as determined
by city staff and its fiscal consultant.
5)
Prior to the adoption of the resolution authorizing issuance
of the industrial revenue bond or revenue notes, the applicant
shall deliver satisfactory evidence of a firm financing
commitment.
6)
The city staff in conjunction with the fiscal consultant
shall adopt administrative procedures setting forth minimum
documentation which shall be required by the applicant to
assist city council in making its judgment. Additionally,
the city staff shall set an amount of an escrow deposit
required at the time of making application, said deposit
intended to be sufficient to cover all legal, administrative,
and fiscal consultive fees associated with the city council's
consideration of the request. In addition, the applicant
shall agree in writing to pay upon demand such amount of
expense in excess of the escrow deposit.
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7)
The city reserves the right to deny any application for
municipal industrial development bond or revenue note
financing at any stage of the proceedings prior to the
adoption of the re~olution authorizing issuance of industrial
development bonds or revenue notes.
Criteria Demonstrating Positive Nature of Use.
All proposals meeting the minimum guidelines set forth above under
Fiscal Criteria shall be weighed additionally by the council on the
basis of the desirability and positive nature of the proposed use,
employing the following standards:
1)
The applicant shall demonstrate that the proposed use has
a positive effect on employment in the City of Chanhassen.
2)
The applicant shall demonstrate that the proposed use has
a positive effect on the tax base for the city. A general
guideline is hereby established of market value of land
and building to requested industrial revenue bond or revenue
note financing of 2 to 1.
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3)
The applicant shall demonstrate that any proposed commercial
use is compatible with the core area redevelopment plan and
is a priority in the development of the downtown area.
4)
The applicant shall demonstrate that the proposed use meets
development criteria in the tax increment district, or meets
the development criteria in an industrial park.
5)
The applicant shall demonstrate that the proposed development
will not require further public expenditures for public
improvements.
6)
The applicant shall demonstrate that the proposed development
is within the priority development area for the city.
7)
The applicant shall de~onstrate that the proposed use is
not in conflict with existing businesses and industries
within the city and that said use will have a positive
effect on the economic market within the city.
the City Council of the City of Chanhassen this
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Walter Hobbs, Mayor
YES
NO
Walter Hobbs
Dale Geving
Dick Pearson
Nick Waritz
John Neveaux