05.01 TIF District - Heart of the godd Life Development

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D DA Parkers Prairie Office: 13979 County Highway 42 Parkers Prairie,MN 56361 David Drown Associates, Inc. (612)920-3320 ext. 110�fax(612)605-2375 Public Finance Advisors www.daviddrown.com TIF PROPOSAL December 9,2020 City of Pequot Lakes Mr. Richard Spiczka,City Administrator ' 4638 Main Street Pequot Lakes, MN 56472 RE: Proposal for Development Consulting Service—Proposed TIF District 2-1 Honorable Mayor, Members of City Council,and Mr.Spiczka: This past summer,the City Council and Pequot Lakes EDC discussed improving Heart of the Good Life Business Park,centered around a new facility for Xcel Energy. As part of this discussion,the City Council discussed several funding sources for the improvements, including the establishment of a tax increment financing district. Prior to Xcel Energy's construction of a new facility,the City must establish the new TIF district in order to use increment to support the new infrastructure planned for the business park. The purpose of this letter is to formally outline the proposed TIF district,the detailed services we will provide for this engagement,confirm compensation requirements,and timeline for TIF process/approval. Proposed TIF District 2-1 The type of TIF District created is an"Economic Development" District—Small Cities exemption.This district has a maximum life of 8 years from the receipt of the first tax increment;that is,9 annual collections of tax increments. If the City proceeds with the creation of the TIF district,the City will likely receive the very first revenues from this District in 2023,with required decertification on December 31, 2031. The TIF District qualifies as a small cities economic development district in that the proposed development will result in increased employment and will preserve and/or enhance the tax base of the City and State. In order to qualify for the small cities exemption,the project must meet: • City has a population of 5,000 or less and is located ten miles or more from a City having a population of 10,000 or more(a "Small City"). • Revenue derived from tax increment from an economic development district may be used to provide improvements, loans,subsidies,grants, interest rate subsidies,or assistance in any form for up to 15,000 square feet of any separately owned commercial facility. • These revenues may also be used if the revenues derived from increments are spent only to assist the facility directly or for administrative expenses,the assistance is necessary to develop the facility,and all of the increments,except those for administrative expenses,are spent only for activities within the district.