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EXHIBIT B �" REASONS AND SUPPORTING FACTS FOR DETERMINATIONS RELATING TO ECONOMIC DEVELOPMENT TAX INCREMENT FINANCING DISTRICT NO. 1-3 OF THE CITY OF PEQUOT LAKES, MINNESOTA January 27, 1995 Minnesota Statutes, Section 469.175, Subdivision 3, requires that a municipality make certain findings before or at the time of approval of a tax increment financing plan, and that the municipality set forth in writing the reasons and supporting facts for each determination. Those reasons and supporting facts for Economic Development Tax Increment Financing District No. 1-3 (the "District") of the City of Pequot Lakes, Minnesota (the "City") are set forth here. 1. Type of District. The City has found that the District is an Economic Development District. Electro Mechanical Industries, Inc. will build a new industrial building totalling approximately 37,500 square feet in the Pequot Lakes Industrial Park adding new taxable value and new jobs. 2. But-For Test. The City has found that 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 and therefore the use of tax increment financing is deemed necessary. Private financing is limited which necessitates the use of tax increment financing assistance. The reasons and supporting facts for this determination are as follows: (a) Tax increment financing incentive loans provided by the Rural Electrification Administration and the State of Minnesota and private capital will provide the sources of financing to complete the project. Without tax increment financing, the financing plan would not be feasible. (b) This development would not occur in the reasonably foreseeable future solely through private investment because of the high costs of the proposed development and limited access to capital. The City will not finance the installation of public improvements and Electro Mechanical Industries, Inc. will not build without the availability of tax increment financing.