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4.A. Consideration of Tax Abatement for Datacard Corporation-Res. No. 7333 (item on joint agenda as 2.1)
General Business 4• A. SHAKOPEE TO: Mayor and City Council Mark McNeill, City Administrator FROM: Samantha DiMaggio, Economic Development Coordinator DATE: 07/29/2013 SUBJECT: Consideration of Tax Abatement for Datacard Corporation - Res. No. 7333 (B,D) Action Sought Council should approve Resolution No. 7333 authorizing tax abatement for Datacard Corporation. This will facilitate the purchase and rehabilitation of 1187 Park Place in Shakopee. Background This action requires a Public Hearing, which for the purposes of accommodating the applicant's schedule, is being held jointly with the Scott County Board of Commissioners. Please see Scott County Request for Board Action for details regarding this application. It should be noted that this is a relocation of jobs from its current operation in the City of Minnetonka. Datacard did explore other options which would have allowed them to stay at their current Minnetonka location. However, because of the company's growth, that option would have required Datacard to split up their operation into two buildings, which was something it wanted to avoid. The purchase of 1187 Park Place will allow them to not only keep all aspects of their operation in the same facility, but will also allow for expansion in the future. On July 10, 2013 the EDAC made a recommendation to the City Council to approve a Business Subsidy in the form of Tax Abatement to Datacard Group or its affiliates. Recommendation Based on the high quality, well - paying jobs that Datacard will bring, staff is recommending the approval the attached Resolution 7333. Budget Impact The Abatement will have a maximum term of eleven years and shall be collected in the years 2014 through 2024. The abatement will occur on the total of the appreciated building value from payable 2013 to 2014 of $2,160,000 and on the proposed new improvement value that is estimated between $2.5 to $4.5 million. the maximum abatement amount for the City to consider would be $334,869. More detailed information from Springsted regarding the abatement is attached. This would be a "Pay As You Go" arrangement, meaning that if Datacard Corporation does not pay property taxes for whatever reason, or if the amount of taxes paid varies for any reason, it impacts the abatement amount back to the company. Relationship to Vision This supports Goal B, "Positively manage the challenges and opportunities presented by growth, development, and change ", and Goal D, " Maintain improve and create strong partnerships with other public and private sector entities ". Requested Action Following the Public Hearing, if the Council concurs, it should, by motion ,approve the following Resolution: Resolution No. 7333, A Resolution granting a property tax abatement for Datacard Corporation in the City of Shakopee. Attachments: Scott County Memo Resolution No. 7333 Springsted Analysis Greater MSP Impact Analysis AGENDA # SCOTT COUNTY, MINNESOTA REQUEST FOR BOARD ACTION MEETING DATE: JULY 29, 2013 ORIGINATING DIVISION: Community Services ORIGINATING DEPARTMENT: Property & Customer CONSENT AGENDA: I Yes f+% No Services PRESENTER: Gary Shelton ATTACHMENTS: Yes f No PROJECT: DataCard Corporation TIME REQUESTED: 30 minutes Economic Development Abatement ACTION REQUESTED: Conduct a Public Hearing at 7:00 p.m. on the Request from DataCard Corporation for an Economic Development Abatement Request and Adopt Resolution No. 2013 -139; Approving an Economic Development Property Tax Abatement and a Contract for Private Development, Including a Business Subsidy Agreement CONTRACT /POLICY /GRANT: I✓ County Attorney Review FISCAL: I✓ Finance Review r Risk Management Review n Budget Change ORGANIZATIONAL VALUES: r Provide a Supportive Organizational Culture F Develop Strong Public Partnerships r.7 Manage Challenges and Create Opportunities r Assure Long Term Fiscal Stability r Emphasize Excellence in Customer Service DEPARTMENT /DIVISION HEAD SIGNATURE: COUNTY ADMINISTRATOR SIGNATURE: Approved: DISTRIBUTION /FILING INSTRUCTIONS: Denied: Tabled: Cynthia Geis, Property & Customer Service Manager Other: Mark McNeil, Shakopee City Administrator Samantha DiMaggio, Shakopee Economic Deputy Clerk : Development Manager Date: Background /Justification: The purpose of this agenda item is to conduct a Public Hearing at 7:00 p.m. on the request from DataCard Corporation for an Economic Development Abatement Request and Adopt Resolution No. 2013 -139 and approving an Economic Development Property Tax Abatement and a Contract for Private Development, including a Business Subsidy Agreement. 428415v2 JAE SH155 -317 DataCard Corporation is a privately held company, which has been in existence for 40 years, is currently located in Minnetonka, and has outgrown its current corporate headquarter facility. The company is a manufacturer of machines that create secure ID cards, including but not limited to, credit cards, driver's licenses, passports, and building access cards. Their portfolio supports high - volume and instant card issuance, secure credential issuance and management, passport production, delivery, fulfillment and packaging. The company had 2012 annual revenues of approximately $500 million and they employ more than 1,300 employees worldwide in 45 countries. They have worldwide operation centers in Asia Pacific, India, Japan, Europe, Middle East, Africa, North America and Latin America. Their corporate headquarters are currently located in Minnetonka, with additional U.S. facilities in Colorado, Florida and Canada. Datacard is a global company that brings additional opportunities to the area with frequent national and international visitors requiring lodging, restaurants, and entertainment venues. DataCard Corporation is proposing to relocate the existing current workforce, located in the City of Minnetonka, of approximately 680 positions with a payroll of $65.1 million, to a pre- existing facility in the City of Shakopee located at 1187 Park Place. (former ADC building) (see area map). They anticipate spending $15.5 million on the acquisition of the real & personal property. They will invest an additional $10 million in new construction and renovation, and $4.5 million on furniture, fixtures and equipment. The current site is 22.19 acres and houses an existing building that is 370,000 square feet and has 680 existing parking spaces. The renovation of the building would include the conversion of existing manufacturing space to office space, expand the building to add a cafeteria and employee work -out room, add additional parking spaces, addition of an exterior courtyard for outdoor dining, and construction of a second floor mezzanine with connection bridge to the existing offices. (see building and site plan attachments) DataCard Corporation is a fast growing company and anticipates the need to add to its existing workforce over the next five years by approximately 125 people. The positions and salaries anticipated are as follows: • 10 Administrative positions - $1,000,000 • 60 Professional positions - $6,000,000 • 30 Technical positions - $2,400,000 • 10 Clerical positions - $ 300,000 • 5 Maintenance positions - $ 150,000 • 5 `Other' positions - $ 200,000 DataCard Corporation is a German owned company, who contacted the City of Shakopee to determine if there is suitable property that can meet their demands and to seek assistance to offset some of the costs affiliated with expanding their business in Scott County. A two parcel site located at 1187 Park Place has been selected in Shakopee that meets the need of this growing company. The payable 2013 current land value on the 22+ acres is $2,540,000 and the existing building is $7,300,000 for a total of $9,840,000 and would remain taxed locally, as it is today. There is an appreciated building value increase for payable 2014 of $2,160,000 and the market value of the total NEW improvements is estimated to have a value in the range of $2.5 million to $4.5 million, the two of which are the indicated values that the abatement will take place on. The project construction is anticipated to start in approximately October 2013 and be completed by September 2014. The developer is requesting a tax abatement incentive (see attached application) due to the extensive internal renovations needed to the existing structure that has put the project approximately 50% over budget. The request is to both the City and County in a maximum amount not to exceed $659,193 that would extend over a period of 11 years, beginning in the year 2014 and ending on or before 2024 They are also requesting assistance from the State of Minnesota, which has been identified later in this document. The City and County are conducting the public hearing jointly in order to expedite the request and allow DataCard Corporation to purchase the property on a timeline that would eliminate any additional costs. The request from the City would be for a tax abatement not to exceed a total of $334,869 over the eleven year period. The request from the County would be for a tax abatement not to exceed a total of $324,324 over the 428415v2 JAE SH155 -317 eleven year period. Other considerations are being reviewed to enhance the package the City can offer, but are outside of the Economic Development Tax Abatement request. The developer has no intent of contacting the school district for inclusion or contribution to the project. Greater MSP is prepared an Economic Impact Analysis for the proposed Shakopee facility which will be provided to the Board (see attached). Generally it can be anticipated that a business of this nature will create another 1.5 jobs elsewhere in the economy. The Department of Employment and Economic Development (DEED) has preliminarily committed to a MN Investment Fund (MIF) grant of $500,000 and potentially another $300,000 - $400,000 in MN Job Skills Partnership (MJSP) matching grant. The County would also be possibly providing DataCard Corporation an incentive in the form of use and capacity of the County's fiber network. Scott County owns a fiber network throughout the metropolitan area, maintained through a partnership with Access Communications. The County's fiber network runs within a close proximity to the site selected by Compass and Scott County will allow the use of the fiber backbone with a fiber contribution of no more than $110,000 toward this project. The need and potential cost savings to the Company would still need to be worked out and would be made a part of the contract negotiations. One of Scott County's adopted strategic initiatives is the promotion of Economic Development within the County. The vision includes, but is not limited to, job creation, livable wages, increase in tax base, construction or acquisition of public facilities and infrastructure improvements. Staff feels that this project meets the initiative of Scott County in that it provides for increased tax base and job creation with livable wage jobs. Staff recommends the approval of the request for the Economic Development Abatement and the authorization for the execution of the Contract for Private Development, Including a Business Subsidy Agreement for DataCard Corporation as defined in Resolution No. 2013 -XXX. Fiscal Impact: Fiber cost, still to be negotiated. Annual tax abatement ranging from $10,694 to $35,055 over a period of eleven years. 428415v2 JAE SH155 -317 BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013 -139 Motion by Commissioner: Seconded by Commissioner: RESOLUTION NO. 2013 -139; APPROVING AN ECONOMIC DEVELOPMENT PROPERTY TAX ABATEMENT AND CONTRACT FOR PRIVATE DEVELOPMENT, INCLUDING A BUSINESS SUBSIDY AGREEMENT FOR DATACARD CORPORATION, IN THE CITY OF SHAKOPEE WHEREAS, the County of Scott (the County) has determined a need to grant a property tax abatement (the "Abatement ") pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Act ") to DataCard Corporation, a corporation organized under the laws of the State of Delaware (the "Developer "), for the acquisition, renovation and equipping of and construction of an expansion to a approximately 275,000 existing square feet of manufacturing and office space to a corporate headquarters (the "Minimum Improvements ") located north of US Hwy 169, and east of County Rd 83 (Canterbury Road), on approximately 22 acres (formerly known as the ADC building) located in the City of Shakopee (the "City "), with the legal description of said property set forth in Exhibit A attached hereto (the "Property "); and WHEREAS, the City of Shakopee (the City) is acting upon the request on July 29 2013 at the joint public hearing with the County; and WHEREAS, on the date hereof, the Board of Commissioners of the County conducted a duly noticed public hearing on the Abatement proposed to be granted by the County. The views of all interested persons were heard at the public hearing; and WHEREAS, the Board of Commissioners has determined the findings of fact as follows: a) It is hereby found and determined that the benefits to the County from the Abatement will be at least equal to the costs to the County of the Abatement, because (a) the County believes that the development to be facilitated is not reasonably likely to occur absent the Abatement, and (b) the long -term taxes collected from the Property after termination of the Abatement will far exceed the amount of the Abatement returned to the Developer; and b) It is hereby found and determined that the Abatement is in the public interest because such action will increase the tax base and provide additional employment opportunities in the County; and c) That the Development, left at its current state (assuming 22 acres) will have a value of approximately $12 million, but if the development occurs will create an estimated $2.5 — 4.5 million dollar increase in market value for property tax purposes, which will be available to all taxing jurisdictions after expiration of the Abatement; and d) That there is a required provision of approximately 125 new jobs in the County over a period of 5 years in addition to the relocation of the existing 680 positions; and e) That the Abatement may facilitate future additional development of the surrounding properties within the industrial area. 428415v2 JAE SH155 -317 BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013 -139 Motion by Commissioner: Seconded by Commissioner: WHEREAS, the County will abate an amount not to exceed $324,324 over a period not to exceed 11 years; NOW THEREFORE BE IT RESOLVED by the Board of Commissioners (the "Board ") of Scott County, Minnesota (the "County ") as follows: Section 1. Recitals. 1.01. DataCard Corporation, a Delaware Corporation, or any of its affiliates (the "Developer "), has proposed to acquire, renovate, and equip the Minimum Improvements on the Property. 1.02. Pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815 (the "Abatement Act "), the City has determined a need to grant a property tax abatement on the Property (the "Abatement ") to the Developer in order to finance a portion of the costs of the acquisition, construction, and equipping of the Minimum Improvements. 1.03. On July 29, 2013, the City conducted a duly noticed joint public hearing, with the County, on property tax abatements proposed to be provided by the City and approved granting the Developer a property tax abatement on the Property. 1.05. The Abatement provided to the Developer by the County to help finance the Minimum Improvements constitutes a business subsidy under Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidy Act "). 1.06. This Board has reviewed information concerning the above - referenced Minimum Improvements. 1.07. On the date hereof, the Board conducted a duly noticed public hearing on the Abatement proposed to be granted by the County and the business subsidy to be provided to the Developer. The views of all interested persons were heard and considered at the public hearing. 1.08. The County intends to enter into a Contract for Private Development (the "Contract for Private Development ") with the Developer, which shall set forth the terms of the Abatement. Section 2. Findings. 2.01. The recitals set forth above are incorporated into this Resolution. 2.02. It is hereby found and determined that the benefits to the County from the Abatement will be at least equal to the costs to the County of the Abatement, because (a) the County believes that the development to be facilitated is not reasonably likely to occur absent the Abatement, (b) the Abatement will help finance the completion and utilization of an abandoned development, which will help prevent blight, and (c) the long -term taxes collected from the Property after termination of the Abatement will exceed the amount of the Abatement returned to the Developer. 428415v2 JAE SHI55 -317 BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013 -139 Motion by Commissioner: Seconded by Commissioner: 2.03. It is hereby found and determined that the Abatement is in the public interest because such action will increase the County's tax base and provide additional employment opportunities in the County. 2.04. It is further specifically found and determined that the Abatement is expected to result in the following public benefits: (a) Creation of an estimated $2.5 -4.5 million increase in market value for property tax purposes, which will be available to all taxing jurisdictions after expiration of Abatement (commencing in 2026); and (b) Provision of an estimated relocation of 680 jobs and 125 new jobs (within 5 years) in the County. Section 3. Actions Ratified; Abatement Approved. 3.01. The Board hereby ratifies all actions of the County's staff and consultants in arranging for approval of this Resolution in accordance with the Abatement Act and the Business Subsidy Act. 3.02. Subject to the provisions of the Abatement Act, the Abatement is hereby approved and adopted subject to the following terms and conditions: (a) The term "Abatement" means the real property taxes generated in any tax - payable year by extending the County's total tax rate for that year against the tax capacity of the Minimum Improvements constructed on the Property, excluding the tax capacity of the land (as established each year during the Abatement), and excluding the tax capacity of the existing building (as established in 2013), and excluding the portion of the tax capacity attributable to the area wide tax under Minnesota Statues, Chapter 473F, all as of January 2 in the prior year. (b) The Abatement will be paid by the County to the Developer on the dates and in accordance with all the terms and conditions of the Contract for Private Development. (c) In accordance with Section 469.1813, subdivision 8 of the Abatement Act, in no year shall the Abatement, together with all other abatements approved by the County under the Abatement Act and paid in that year exceed the greater of 10% of the net tax capacity of the County for that year or $200,000 (the "Abatement Cap "). The County may grant any other abatements permitted under the Abatement Act after the date of this Resolution, provided that to the extent the total abatements in any year exceed the Abatement Cap, the allocation of Abatement Cap to such other abatements is subordinate to the Abatement granted pursuant to this Resolution. The County currently has four approved Economic Development Contracts to date. (d) The Abatement will have a maximum term of eleven years and shall be collected in the years 2014 through 2024. The abatement will occur on the total of the appreciated building value from payable 2013 to 2014 of $2,160,000 and on the proposed new improvement value that is estimated between $2.5 to $4.5 million. 428415v2 JAL SII155 -317 BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013-139 Motion by Commissioner: Seconded by Commissioner: (e) In no event shall the total payments of Abatement to the Developer, by the County, exceed $324,324 or continue to be paid for more than eleven years. (f) In no event shall the annual amount of the Abatement paid to the Developer exceed $29,484. (g) The Abatement is subject to modification in accordance with the Abatement Act, subject to the terms of the Contract for Private Development. (h) In accordance with Section 469.1815 of the Abatement Act, the County will add to its levy in each year during the term of the Abatement the total estimated amount of current year Abatement granted under this Resolution. (1) The County makes no warranties or representations regarding the amount or availability of the Abatement. (i) The Abatement shall be provided to the Developer pursuant to the terms and conditions of the Contract for Private Development, as approved by the Board. Section 4. Restrictions on Abatement. The Abatement granted pursuant to this Resolution shall not commence until the following conditions are satisfied: (a) The County, the City and the Developer mutually agree on the terms and conditions of a Contract for Private Development. (c) The Developer locates a portion of its operations to the City and purchases the Property. Section 5. Implementation. The Chair and the County Administrator are authorized and directed to execute and deliver any additional agreements, certificates or other documents that the County determines are necessary to implement this Abatement and Resolution and to execute the Contract for Private Development including the County's fiber incentive. 428415v2 JAE S1I155 -317 BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013 - 139 Motion by Commissioner: Seconded by Commissioner: Section 6. Effective Date. This Resolution is effective upon execution in full of the Contract for Private Development. COMMISSIONERS VOTE Wagner r Yes fl No Absent I Abstain Wolf IW Yes r No r Absent r Abstain Menden r Yes f No r Absent r Abstain Marschall r Yes r No r Absent r Abstain Ulrich r Yes r No h Absent r Abstain State of Minnesota) County of Scott ) Gary L. Shelton, duly appointed qualified County Administrator for the County of Scott, State of Minnesota, do hereby certify that I have compared the foregoing copy of a resolution with the original minutes of the proceedings of the Board of County Commissioners, Scott County, Minnesota, at their session held on the 29th day of July, 2013 now on file in my office, and have found the same to be a true and correct copy thereof. Witness my hand and official seal at Shakopee, Minnesota, this 29 day of July, 2013. County Administrator Administrator's Designee 428415v2 JAE SH155 -3I7 EXHIBIT A TO ABATEMENT RESOLUTION PROPERTY The Property consists of approximately 22 acres currently located north of US Hwy 169 and east of County Road 83 (Canterbury Road), in the City of Shakopee, with the following property identification numbers and legal descriptions: 271760020: Part of Lot 1, Block 2, Valley Park 11 Addition, lying South of a line commencing at the Northeast corner of said Lot 1 Block 2, thence proceeding South along the East Tine 447 feet to the point of beginning of the land to be described, thence West for 797.52 feet to the West line of said Lot 1, Block 2 and there terminating. 271540010: The West 22 feet of the South 743.31 feet of Lot 1, Block 1, Valley Park 9 Addition 428415v2 JAE SH155 -317 • I‘ SCOTT COUNTY Ntt GOVERNMENT CENTER ' 114/„. TAXATION DEPARTMENT 200 FOURTH AVENUE WEST SHAKOPEE, �- MINNESOTA 55379 -1220 SH CYNTHIA M. GEIS, cgeis @co.scott.mn.us Property & Customer Services Director http: / /www.co.scott.mn.us Scott County Auditor Treasurer APPLICATION FOR ECONOMIC DEVELOPMENT TAX ABATEMENT PART I - GENERAL INFORMATION 1. Date of the Request: 6/28/2013 2. Applicant: Datacard Group 3. Description of Business: Datacard Group collaborates with customers to create highly secure financial card programs and government ID initiatives, as well as secure ID programs for education, corporate security and many other markets. Datacard brings unmatched experience and expertise to every engagement, including industry best practices and a deep understanding of complex operational issues. All of this enables Datacard to deliver innovative solutions and services that help customers address critical challenges. Datacard made secure, high - volume issuance of credit cards possible more than 40 years ago when they introduced the first high -speed card personalization system. Today, Datacard continues to develop patented technologies that help customers improve productivity, profitability and cardholder satisfaction. Datacard's portfolio supports high- volume and instant card issuance, secure credential issuance and management, passport production, delivery, fulfillment and packaging. Datacard combines hardware, software and supplies using an integrated approach that increases security, enhances quality and reduces total cost of ownership. Datacard also provides expert service and support. Building on a 40 -year heritage of customer success, Datacard remains the industry's best - selling brand of secure ID and card personalization solutions. Every day, these solutions are used to personalize and deliver more than 10 million cards and 7 million smart cards, including more than 90 percent of the world's payment cards. 4. Contact Name: Jeff Smolinski 5. Contact Phone Number: 952 - 988 -2804 6. Contact Address: Address: 11111 Bren Road West, Minnetonka, MN 55343 -9015 7. Description of the Request: Datacard Group is seeking abatement of the increase of the existing property taxes that will occur as a result of the new investment in the facility. 8. Parcel Number(s): 271760020, 271540011 9. Current Ownership: The current owner of the property is ADC Connectivity Solutions LLC 10. Legal Description(s): Property Description (PID #: 271760020): Acres: 22.19 VALLEY PARK 11TH ADDN Lot 001 Block 002 LYING S OF LINE COM NE COR, S ALONG E LINE 447' TO POB, W 797.52' TO W LINE & THERE TERM Property Description (PID #: 271540011): Acres: .38 VALLEY PARK 9TH ADDN Lot 001 Block 001 W 22' OF S 743.31' 11. Starting Payable Year: 2016 12. Duration: 9 years 13. Total Amount of Request: Estimated to be between $137,000 and $183,000 per year; based upon the preliminary analysis prepared by Springsted Incorporated on June 28, 2013. PART II - STATUTORY REQUIREMENTS 14. Description of the expected benefit to Scott County. The benefit must be equal to or greater than the cost of the abatement. Datacard Group has outgrown our current corporate headquarter facility in Minnetonka and is now considering two options to deal with the growth. What Datacard is proposing; is to relocate our current workforce of approximately 680 positions, with a payroll of $65.1 million, to an existing facility in the city of Shakopee. Over the next three to five year period (after Datacard occupies the new building) the company proposes to hire approximately 120 new employees. Datacard Group's average salary per employee is $95- 96,000. Datacard Group proposes spending $15.5 million on acquisition of real and personal property and investing an additional $10 million new construction and renovation, and $4.5 million on furniture, fixtures and equipment. The city of Shakopee has requested GREATER MSP to conduct an economic impact analysis of this project. In general, it can be anticipated that a business of this nature will create another 1.5 jobs elsewhere in the economy. 15. Description of public interest served by the proposed abatement. Check all that apply and provide an explanation for each item checked. X The abatement will increase or preserve tax base The site in Shakopee is 22.57 acres, the building is 370,000 square feet, and there are 680 existing parking spaces. The property has a current assessed value for pay 2013 of $9.84 million, and an assessed value for pay 2014 of $12 million. Datacard Group would make modifications to the Shakopee building, including the conversion of existing manufacturing space to office space, expanding the building to add a cafeteria / dining area, and workout room for employees, and add parking spaces. As noted above, our projected investment in the property including purchase, renovation, and FF &E is $30.0 million. Datacard has worked with Scott County's Commercial Assessor, Terence Chacka, to estimate what the future assessed value of the property may be if Datacard were to purchased it and make the proposed improvements. Mr. Chacka has estimated that the property value would increase from $2.5 million to $4.5million; which was the basis for the abatement analysis provided by Springsted. X The abatement will provide jobs. (Specify number & wages) As noted above, in addition to our current workforce of approximately 680 positions, with a payroll of $65.1 million, Data Card would project, over a five year period to add new jobs as noted below: FIVE YEAR (Projected Jobs) # $ Administrative 10 $ 1,000,000 Professional 60 $ 6,000,000 Technical 30 $ 2,400,000 Clerical 10 $ 300,000 Maintenance 5 $ 150,000 Other 5 $ 200,000 The abatement will provide or help acquire or construct public facilities The abatement will redevelop or renew blighted areas The abatement will provide access to services for county residents The abatement will finance or provide public infrastructure 16. Is the property currently located within a Tax Increment Financing District: yes XX no PART III - ADDITIONAL CRITERIA MANDATED BY SCOTT COUNTY 17. Explain why the project is not financially feasible "but for" the abatement subsidy requested. Datacard Group has outgrown our current corporate headquarter facility in Minnetonka and is now considering two options to deal with the growth. One option would split Datacard Group's staff into more than one facility. This would require a secondary site either within the Twin Cities area or potentially the expansion of our Denver location. And, the second option would move all of the current staff, along with new growth, to the Shakopee site. The budget for the Shakopee project is was initially set at $20.5 million based on the funds currently available. Because of the extensive internal renovations needed to the existing structure in Shakopee (to make it work operationally for our business processes) the proposed budget has risen by 50% to $30 million. This cost increase is prohibitive to our organization in moving forward with the project without some type of public assistance. 18. Supply an overview of the entire project, and each phase within the project. • Additional parking has to be added to increase parking capacity from 662 to 800+ parking spaces (future plans include parking to just over 1000 spaces) • Increase of cafeteria to accommodate 3X the current seating capacity • Addition of an exterior courtyard for outdoor dining • Construction of a fitness center to support Wellness Programs of the Company • Remodeling of a major portion of the existing office space • Construction of a second floor mezzanine with connection bridge to the existing offices to be done in existing plant space • Remodeling of a substantial portion of the plant floor space into professional office space 19. Supply models or illustrations of the completed project: Illustrations have been provided for use at the County Board's workshop. 20. Supply blue prints of the project: Preliminary plans have been provided for use by the Assessor's Office in estimating added value. 21. Supply an appraisal and feasibility study of the completed project: Preliminary plans have been provided for use by the Assessor's Office in estimating added value or $2.5 to $4.5 million. 22. Supply a pro -forma operating statement of the project with an estimate of market value as completed: An operating statement will be provided at a later date if needed. 23. List all types of government assistance being requested for the entire project 1. The company is requesting property tax abatement from the City of Shakopee. 2. The company is requesting property tax abatement from the Scott County. 3. The company may request property tax abatement from the Shakopee School District. 4. The company is requesting assistance from the MN Department of Employment and Economic Development (DEED) from the following two sources: a. MN Investment Fund (MIF): $500,000 forgivable loan for fixed assets b. MN Job Skills Partnership: $400,000 grant for job training 5. The company is working with Scott County staff on a potential fiber optic incentive. 24. List the project construction schedule including: Construction Start Date: Exterior work would begin approximately 10/1/13; Interior work would begin approximately 1/1/14. Construction Completion Date: Approximately 9/1/2014 25. Municipal Reference List names of any municipalities along with contact names and phone numbers in which you have completed projects within the past five years The company has been at its existing Minnetonka location for over 40 years and has not completed a project in another location. Datacard I. + f � � -, I 1 l • < ■ s_Y i $ ry > y ., 1B" a x i_ d -t I .v. $ °Y , i • ... , . , i i s 4'i : 7 '' .. - ;iL j 7.: J7' z -�d3� !i { � i . h1 t t � 1 > — Property Information Parcel ID: 271760020 Bathrooms: 14 Taxpayer Name: ADC CONNECTIVITY Year Built: 1997 Taxpayer Addressl: 1187 PARK PL Deeded Acreage: 22.19 Taxpayer Address2: SHAKOPEE, MN 55379 GIS Acreage: 22.18716 Property Addressl: 1187 PARK PL Zoning Classification: Property Address2: SHAKOPEE MN 55379 Legal Description: SubdivisionName VALLEY PARK 11TH ADDN Lot 001 Block 002 SubdivisionCd 27176 LYING S OF LINE COM NE COR, S ALONG E LINE 447' TO POB, W School District: 0 Plat Name: PLAT -27176 VALLEY PARK 11TH Estimated Land Value: $2,500,000 Block: 002 Estimated Buildings Value: $9,460,000 Lot: 001 Total Estimated Market Value: $11,960,000 Unique Well & Boring No.: Home Style: N/A Well Depth Drilled: Bedrooms: 0 Well Date Drilled: This drawing is neither a legally recorded map nor a survey and Is not Map Scale N intended to be used as one. This drawing Is a compilation of records, 1 inch = 1272 feet information, and data located in various city, county, and state offices, and other sources affecting the area shown, and Is to be used for reference W E purposes only. Scott County is not responsible for any Inaccuracies herein Map date contained. If discrepancies are found, please contact the Scott County Surveyors office. 7/22/2013 S , DEPARTMENT KEY DATACARO GROUP ECOOMOCii& xelwwa 6 Iii 6 Warehouse bfi1• 1 p l l oTf . 4 t r �,�(! v : 11MNdioWH Yi ice, � ::. Winhoute °• �' r - +t'� sue* '7 t a.i 8 & C.sIgiiEfg111Nfiu0 'I 1 .p r F t 1 ...na.aNC w',.?".,c....,° i.,,, 4414, ..Ni.' r Cimulalloe . F.- '''..1-,4`r 1 n.s SECURE PRODUCTION ' ': 4 1 • DatacardGroup . fit 'Linking + Centerng - basement floor 5013 RSP ARCHITECTS DEPARTMENT KEY kaw � zr,..ra,F„ wa oa • F, "Pb A L h. din a.,.J$,.(nJF,•. Ere x`� = Immiffa.7:".,.. .., .. 0,-:,:,,,,i,,,..:,.....,..„..„,.:.....t.ltatt..e...,.:,,,m1... i is i .., : I' ..I .1 • 063''''A;', { 4 r a s i h • -•Ni AleZr'. • I .",.. • • r Y(A13 EH0 U5 x:o:u t• • �...b f Pz' , r ..•r,�� • -- J '0T ' yr3a'e car a .1.414t0:4 .,, yD �' ,k • • ` $ ® E►1f1111. I �u f ti's" y t 1 '(r ^, • ° 1 1 . .. . ; , ac -.C.. : . ` • i `. . �; � nt•� ,c.. n 'x'..6"11 a;'3 e3t.. t . a • • "..'m ate-: .v. x ;r�_ . o g a M� J : >ers ••••• f. ♦ - - .'!•1:•,•..t•.... . ,„.•••1 •-- ••f•;O r•• • , Of*' •♦ .*:. *....* ..,. '•...•.••' *WI •- .0.. •A.•:•••• ' r ma 3r7c.r mP { , �4ir � • • 1�!��, • 0 a ",� , ,��.1 �rv� -,, • • ■ 1 i t �'' I I o• • a f' r t t r 13E)( ° I�,, saw 4 a r a 1.1v4-, ?I • U l a m •. _ _ •— • courtyard — aC — — - -- - -^ expansion DatacardGroup t es t fi t ` 'Linking + Center - firs floor • 3 RSP :A1 :CH T:ECTS • DEPARTMENT KEY OATACARO OROJP m bf1'altob , r �... '',1, 1', 'M ik } •. Stu ors*, ,! �T * ^� vw � r ,. ManuheLrcingE`im(brt '' Wrroheose xr ..il.. .... t . '. . .'1 ± ,.no.,dr , r,:.. lI • ,, N Ity,Yff SIflm2p recr .. . ,:. "AL .�Vz.42x.' u..> iJ:_.._ t..QU; 1 Circulation ..... l A v: J am; E Y . o iit , ....... a l I c i AIM - St .�■.,,,. - ,r te r ■ II I • . r..................................i • . ' Aw • . 7 li • I • DatacardGroup test fit Linking + Centering' - second W9/13 . P :ARCH IT ECT S GREATER l' - MSPTM Minneapolis Saint Paul Regional Economic Development Partnership Datacard Group — Economic Impact As requested, economic impact estimates have been compiled for the proposed Datacard expansion on the Minneapolis -St. Paul metropolitan area. This memo enumerates the total (direct, indirect and induced) economic impact. There are two pieces to this impact estimate. The construction phase is a one -time impact that creates economic activity during the building process, but then goes away once building is complete. The operations phase impact estimate examines a two year scale up of operations. If the company maintains the level of business operations as projected, the operations phase has ongoing impact. Summary • The results indicate that for every 1 job created at Datacard, another 1.2 jobs are created elsewhere in the economy. • Over the construction and 2 year scale up phase, over $30 million in wages will be paid out and over $1.5 million in new tax revenue generated. • There is an estimated $3,300 per operations job in new tax revenue generated for the state. Approximately $1,180 of that is estimated to be new local tax revenue. Based on previous experience with firms, approximately 15% of employees are likely to reside in the local community. This suggests approximately $49,000 in new local tax revenue annually when the firm is at full employment levels. Further, if 15% of the retained employees also move to the local community, another $118,000 of new local tax revenue may be generated. • The wages of the direct jobs will average in the mid - $90,000 range, while the indirect and induced jobs will average in the $37,000 range. 1 In what is often called either a ripple effect or multiplier effect, Increased economic activity triggers additional spending. The total economic impact of the economic activity is the sum of three effects: The direct effect (the change in activity that stimulates other activity, In this case construction or an Increase in employment), the Indirect effect (resulting from industries purchasing from other Industries due to Increased demand) and Induced effects (resulting from the expenditure of new household Income generated by the direct and indirect effects). GREATER f MSP Minneapolis Saint Paul Regional Economic Development Partnership Project Overview Construction Phase: Construction - related costs for the project, as provided by Datacard, are estimated to be $7.2 million (renovation and construction) with $2.3 million in new equipment and fixture related purchases. Operations Phase: When construction is complete, Datacard estimates they will employ 126 new workers over two years. For the purposes of this analysis, it is assumed 63 workers begin in year 1, and an additional 63 are hired in year 2. Datacard estimates an average wage of approximately $95,000 for those workers. Datacard estimates they will also relocate 680 professional and production jobs from Minnetonka. Approximately 500 of those positions will have average wages of $90,000 or more, with the remaining positions in the range of $45,000. These positions are not analyzed in the table below because they are not new to the metro -wide economy. However, the relocation may induce some workers to shift their residence closer to the new facility. Assuming 15% choose to move closer to the new facility, this may mean 100 new workers for the local community. Economic Impact of Datacard Facility Construction Operations: Scale Up 2013 2014 2015 Employment (Direct) 50 63 126 Employment (Indirect, Induced) 51 76 152 Wages and Salaries (Direct, $M) $2.2 $6.0 $11.9 Wages and Salaries (Indirect, Induced, $M) $1.9 $2.9 $5.7 GDP (Direct, $M) $3.9 $5.5 $11.0 GDP (Indirect, Induced, $M) $4.5 $6.7 $13.4 Estimated State Tax Revenue Generated by Employees ($thousands) $179 $459 $918 Dollars are not adjusted for inflation. This analysis excludes changes In govemment spending from reduced revenue collections, and assumes that workers will either be (a) moving In from out of state and living in newly built housing or (b) are currently unemployed, buy no taxable goods, and live in untaxed property. Source: Analysis conducted with IMPLAN 3.0; 2013 Tax Incidence Study, Minnesota Department of Revenue. Prepared by: Research & Analysis, Minneapolis Saint Paul Regional Economic Development Partnership (GREATER MSP). Analysts dated: July 11, 2013. Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 ,., Springsted Tel: 651 - 223 -3000 Fax: 651 - 223 -3002 www.springsted.com DRAFT MEMORANDUM TO: Mark McNeill, City Administrator Julie Linnihan, Finance Director Samantha DiMaggio, Economic Development Coordinator FROM: Mikaela Huot, Vice President/Consultant CC: Renee Christianson, Business Development, Senior Analyst, Scott County CDA Paul Steinman, Vice President/Client Representative DATE: July 22, 2013 SUBJECT: Tax Abatement revenue projections for proposed Datacard new development project The City has requested that Springsted provide preliminary tax abatement revenue projections for a proposed new project that includes the acquisition and renovation of an existing facility within the City of Shakopee. Following a preliminary analysis prepared by Springsted based on certain value assumptions of the project, additional information has been made available resulting in changes to the projected revenues. In addition, the City has requested that preliminary property tax payments for the project be included. As a result, this memo is an update to previous correspondence. Development assumptions include the renovation of an existing building, for which a tax abatement project would be created to capture taxes generated from the new building through an annual abatement levy. The anticipated build - out of the facility is projected to commence with acquisition in late 2013 with construction commencing in 2014 and be complete by December 31, 2014. Therefore taxes paid in full on the proposed project would occur in taxes payable 2016. In addition, a market value increase is expected to occur for taxes payable 2014 and the proposed tax abatement includes the first two years of the market value increase followed by 9 years of the original market value increase and resulting from the company relocation. The City of Shakopee has traditionally provided up to 9 years of tax abatement assistance similar to the terms of an economic development district for proposed new projects. However, in certain cases in which a particular company Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 2 that has located within the Dean Lakes business park has provided greater employment opportunities with higher wages, the City of Shakopee has considered providing up to 15 years of tax abatement assistance. For purposes of the updated preliminary analysis we are including two alternate market values scenarios, Scenario 1: Low EMV with $2,5M of new building value and Scenario 2: High EMV with $4.5M of new building value, based on preliminary value information provided by Scott County. For both value scenarios we are illustrating the potential revenue generated by both the City and Scott County. Participation by each taxing entity is subject to policy review and approval. In addition, the market value increase expected for taxes payable 2014 is $2,160,000. Additional assumptions and terms of the proposed abatement are outlined further below, The purpose of this memo is to provide financial projections for proposed tax abatement assistance based on 100% of the annual tax abatement revenues for 11 years, with City and County participation. Two years includes the market value increase in taxes payable 2014 ($2,160,000) followed by 9 years with the additional market value increase resulting from the relocation of the new company ($2.5M and $4,5M, respectively). Tax Abatement Assumptions Springsted made certain assumptions to calculate the estimated amount of tax abatement revenues generated by the proposed project. Those assumptions include the following: Tax Abatement A city may grant a tax abatement, by contract or otherwise, of the taxes imposed by the city on a parcel of property, which may include personal property and machinery, or defer the payments of the taxes and abate the interest and penalty that otherwise would apply, if: • it expects the benefits to the city of the proposed abatement agreement to at least equal the costs to the city of the proposed agreement or intends the abatement to phase in a property tax increase, as provided in clause (2)(vii); and • it finds that doing so is in the public interest because it wit: o increase or preserve tax base; o provide employment opportunities in the political subdivision; o provide or help acquire or construct public facilities; o help redevelop or renew blighted areas; o help provide access to services for residents of the political subdivision; o finance or provide public infrastructure; o phase in a property tax increase on the parcel resulting from an increase of 50 percent or more in one year on the estimated market value of the parcel, other than increase attributable to improvement of the parcel; or Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 3 o stabilize the tax base through equalization of property tax revenues for a specified period of time with respect to a taxpayer whose real and personal property is subject to valuation under Minnesota Rules, chapter 8100. For our preliminary tax abatement scenarios we used the following assumptions: • Revenue projections were prepared for two market value estimates o Scenario 1: Low EMV with incremental market value of $2.5M o Scenario 2: High EMV with incremental market value of $4.5M • Estimated market value information provided by Scott County • Existing land and building value would not be abated (as of assess 2012 for taxes payable 2013) o Parcel ID: 27- 176002 -0 • Payable 2013 EMV of $9,800,000 o Parcel ID: 27- 154001 -1 • Payable 2013 EMV of $40,000 o Total non - abated market value of $9,840,000 • Abate market value increase commencing in taxes payable 2014 o $2,160,000 ($12,000,000 from $9,840,000) • Abate new building value commencing in taxes payable 2016 o Scenario 1: Low EMV with incremental market value of $2.5M o Scenario 2: High EMV with incremental market value of $4.5M • Proposed abatement term o 2 years — market value increase of $2,160,000 o 9 years — market value increase of $2,160,000 plus increase of $2.5M or $4.5M, respectively o 11 years — total abatement • Both scenarios illustrate potential City and County participation • Abatement participation o 100% participation City and County • Construction schedule o Construction commences in 2013 and completes in 2014 • 100% assessed in January of 2015 for taxes payable in 2016 • Payable 2013 tax rates remain constant through abatement term o City: 41.996% o County: 40.674% o School: 39.715% o Other: 5.701% o Total: 128.086% • Current class rates remain constant through abatement term • Fiscal Disparities contribution rate o 2013 contribution rate of 39.1355% Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 4 o Contribution made from new tax abatement project • Phased in annual market value inflator assumed o 0% years 1 -5 o 1% years 6 -8 o 2% years 9 -11 • Present value date of August 1, 2013 • Present value (discount rate) of 4% Tax Abatement Revenue Estimates Scenario 1: Scenario 2: Low EMV High EMV Estimated Incremental New Building Market Value $2,500,000 $4,500,000 2014 Annual Abatement Revenue: $11,042 $11,042 City share with $2,160,000 market value increase 2014 Annual Abatement Revenue: $10,694 $10,694 County share with $2,160,000 market value increase 2016 Annual Abatement Revenue: $23,823 $34,047 City share upon completion of new project in 2014 2016 Annual Abatement Revenue: $23,072 $32,975 County share upon completion of new project in 2014 2016 Total Annual Abatement Revenue upon completion in 2014 $46,895 $67,021 Estimated Total City Abatement Revenue over 9 years $240,022 $334,869 Estimated Total County Abatement Revenue over 9 years $232,464 $324,324 Estimated Total Tax Abatement Revenue over 9 years $472,486 $659,193.. Estimated Present Value of Revenues (Combined City and County) $371,787 $515,376 (4% discount rate) Estimated Total Property Tax Payment commencing 2016 based $572,784 $651,986 upon building completion in 2014 Thank you for the opportunity to be of assistance to the City of Shakopee. Please let us know how we can best assist you as this project moves forward and should you have any questions please feel free to contact us. Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 5 Tax Abatement Revenue Projections for Scenario 1: Low EMV with Estimated Building Market Value of $2.5M with 9 -Year Term and 100% Annual Abatement Revenues Available for Project Projected Tax Abatement Report City of Shakopee, Minnesota Proposed New Tax Abatement Project - Datacard City and County Participation Low Value Scenario with Building Value of $2.5M Two years of abatement on existing building value increase (2014 -2015) and Nine years on expansion (2016 -2024) - incremental MV Inflator and 100% abatement Less: Non- Less: Retained Times: City County School District PV Total PV City PV County Total Annual Total Total Abated Fiscal Captured Tax Annual Abatement Abatement Abatement Total Abatement Abatement Abatement Estimated Period Market Net Tax Net Tax Disp. @ "" Net Tax Capacity Total Revenues '""• Revenues """" Revenues Tax Revenues Revenues Revenues Property Ending Value Capacity Capacity * 39.1355% Capacity Rate""" Tax 42.00% 40.67% 39.72% Abatement 08 /01/13 08/01/13 08 /01/13 Tax Pymt (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) 4.00% 4.00% 4.00% 12/31/13 9,840,000 196,050 196,050 0 0 128.086% 0 0 0 0 0 0 0 0 388,244 12/31/14 12,000.000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 21,107 10,722 10,384 473,782 12/31/15 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 20,295 10,310 9,985 473,782 12/31/16 14,500,000 289,250 196,050 36,474 56,726 128.086% 72,658 23,823 23,072 0 46,895 42,100 21,387 20,713 572,784 12/31/17 14,500,000 289,250 196,050 36,474 56,726 128.086% 72,658 23,823 23,072 0 46,895 40,481 20,564 19,917 572,784 12/31/18 14,500,000 289,250 196,050 36,474 56,726 128.086% 72,658 23,823 23,072 0 46,895 38,924 19,773 19,151 572,784 12/31/19 14,525,000 289,750 196,050 36,670 57,030 128.086% 73,047 23,950 23,196 0 47,147 37,628 19,115 18,513 573,774 12/31/20 14,550,250 290,255 196,050 36,868 57,337 128.086% 73,441 24,079 23,321 0 47,401 36,375 18,479 17,897 574,774 12/31/21 14,575,753 290,765 196,050 37,067 57,648 128.086% 73,839 24,210 23,447 0 47,657 35,166 17,864 17,302 575,784 12/31/22 14,627,268 291,795 196,050 37,470 58,275 128.086% 74,642 24,473 23,702 0 48,175 34,181 17,364 16,817 577,823 12/31/23 14,679,813 292,846 196,050 37,882 58,914 128.086% 75,461 24,742 23,963 0 48,704 33,227 16,879 16,348 579,904 12/31/24 14,733,409 293,918 196,050 38,301 59,567 128.086% 76,297 25,016 24,228 0 49,244 32,303 16,410 15,893 582,027 $732,057 $240,022 $232,464 $0 $472,486 3371,787 $188,867 3182,920 $6,518,244 (I) includes expected market value increase in 2014 for PID 271760020 to be captured thru abatement commencing in 2014 * Base value based on existing land and buldng value. Abated value includes newesfimated land building of 32.5M PID: 271760020 $9,800,000 "" Fiscal disparities contribution from incremental building grot+th PID: 271540011 $40,000 State C -1 Tax Rate 52,52% """ Final payable 2013 tax rate based on information provided by County (taxing code 2204 2013 Existing Market Value 59,840,000 Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 6 Tax Abatement Revenue Projections for Scenario 2: High EMV with Estimated Building Market Value of $4.5M with 9 -Year Term and 100% Annual Abatement Revenues Available for Project Projected Tax Abatement Report City of Shakopee, Minnesota Proposed New Tax Abatement Project - Datacard City and County Participation High Value Scenario with Building Value of $4.5M Two years of abatement on existing building value increase (2014 -2015) and Nine year on expansion (2016 -2024) - incremental MV Inflator and 100% abatement Less: Non- Less: Retained Times: City County School District PV Total PV City PV County Total Annual Total Total Abated Fiscal Captured Tax Annual Abatement Abatement Abatement Total Abatement Abatement Abatement Estimated Period Market Net Tax Net Tax Disp. © ** Net Tax Capacity Total Revenues • *** Revenues ' *** Revenues Tax Revenues Revenues Revenues Property Ending Value (13 Capacity Capacity " 39.1355% Capacity Rate'"" Tax 42.00% 40.67% 39.72% Abatement 08/01/13 08/01/13 08/01/13 TaxPymt (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) 4.005 4.00% 4.00% 12/31/13 9,840,000 196,050 196,050 0 0 128.086% 0 0 0 0 0 0 0 0 388,244 12/31/14 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 21,107 10722 10,384 473,782 12/31/15 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 20,295 10,310 9,985 473,782 12/31/16 16,500,000 329,250 196,050 5Z128 81,072 128.086% 103,841 34,047 32,975 0 67,021 60,169 30,666 29,603 651,986 12/31/17 18,500,000 329.250 196,050 52,128 81,072 128.086% 103,841 34,047 32,975 0 67,021 57,855 29,390 28,465 651,986 12/31/18 16,500,000 329,250 196,050 52,128 81,072 128.086% 103,841 34,047 32,975 0 67,021 55,630 28,260 27,370 651,986 12/31/19 16,545,000 330,150 196,050 52,481 81,619 128.086% 104,543 34,277 33,198 0 67,474 53,851 27,356 26,495 653,768 12/31/20 16,590,450 331,059 196,050 52,836 82,173 128.086% 105,251 34,509 33,423 0 67,932 52,131 26,483 25,649 655,568 12/31/21 16,636,355 331,977 196,050 53,196 82,731 128.086% 105,967 34,744 33,650 0 68,394 50,467 25,637 24,830 657,385 12/31/22 16,729,082 333,832 196,050 53,922 83,860 128.086% 107,413 35,218 34,109 0 69,327 49,188 24,987 24,201 661,058 12/31/23 16,823,663 335,723 196,050 54,662 85,011 128.086% 108,887 35,701 34,577 0 70,278 47,945 24,356 23,589 664,802 12/31/24 16,920,136 337,653 196,050 55,417 86,186 128.086% 110,392 36,195 35,055 0 71,250 46,738 23,743 22095 668,624 61,021,332 $334,869 $324,324 $0 $659,193 $515,376 5261,810 $253,566 $7,252,969_ ni includes expected market value increase in 2014 for HD 271760020 to be captured thru abatement commencing in 2014 'Base value based on existing land and bulding value. Abated value includes newestimated land building of $4.5M PID: 271760020 $9,800,000 ** Fiscal disparities contribution from incremental building grouch P1D: 271540011 540,000 State C -1 Tax Rate 52.52% *** Final payable 2013 tax rate based on information provided by County (taxing code 2204 2013 Existing Market Value 59,840,000 Public Sector Advisors AGENDA # SCOTT COUNTY, MINNESOTA REQUEST FOR BOARD ACTION MEETING DATE: JULY 29, 2013 ORIGINATING DIVISION: Community Services ORIGINATING DEPARTMENT: Program Delivery CONSENT AGENDA: I Yes Pr No PRESENTER: Lisa Freese — 8363 ATTACHMENTS: r Yes r PROJECT: TIME REQUESTED: 30 Minutes ACTION REQUESTED: Adopt Resolution No. 2013 -140; Authorizing Submittal of Comments to the Minnesota Department of Transportation (MnDOT) on the Minnesota State Highway Investment Plan (MnSHIP) CONTRACT /POLICY /GRANT: r County Attorney Review FISCAL: r Finance Review • r Risk Management Review r Budget Change ORGANIZATIONAL VALUES: n Provide a Supportive Organizational Culture h Develop Strong Public Partnerships F. Manage Challenges and Create Opportunities r Assure Long Term Fiscal Stability r Emphasize Excellence in Customer Service DEPARTMENT /DIVISION HEAD SIGNATURE: COUNTY ADMINISTRATOR SIGNATURE: //!," Approved: DISTRIBUTION /FILING INSTRUCTIONS: Denied: Tabled: Community Services, Mitch Rasmussen Other: Community Services, Eunie Quade Community Services, Lisa Freese Deputy Clerk : Date: Background /Justification: The purpose of this agenda item is to adopt Resolution No. 2013 -140, authorizing submittal of comments to the Minnesota Department of Transportation (MnDOT) on the Minnesota State Highway Investment Plan ( MnSHIP). MnSHIP is MnDOT's instrument for deciding and communicating capital investment priorities for their system for the next 20 years. MnSHIP is a fiscally constrained plan, meaning the planned expenditures must align with expected revenues, which total $18 billion. Meanwhile, the projected transportation needs on the state highway system total $30 billion. The plan considers many factors when setting priorities, including federal and state law, system conditions, and public input. The result is a set of investment priorities that vary over the next 20 years. MnDOT's priorities for the next 10 years balance preservation of existing infrastructure with investments in safety, new connections for multiple modes of transportation, and other projects that advance economic development and quality of life objectives. However, investments in the second 10 years focus almost exclusively on preserving existing infrastructure. Despite this focus, the number of roads and bridges in poor condition will more than double and perhaps even triple within 20 years. Given the projected $12 billion funding gap, there will be many unfunded priorities within the 20 -year horizon. Community Services staff have reviewed the document and prepared a letter with comments for submittal to MnDOT. The primary comments include: • Support the completion of Highway 610 and the regional system • Support the inclusion of the inter - regional corridor system in the plan • Applaud MnDOT's efforts to move towards performance measures • Continue to work with local partners to leverage non -MnDOT funding sources • Support MnDOT's efforts to build support for additional transportation funding to address preservation, safety and mobility funding gaps • Recognize Transportation system and regional economic development relationship -SCALE TED Initiative The comments above are included in the letter to MnDOT. Public comments on the MnSHIP document will be accepted through July 31. A link to the MnSHIP document is included below. http: / /www. dot. state. mn. us / planning /mnship /participate.html Fiscal Impact: None • BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013 -140 Motion by Commissioner: Seconded by Commissioner: RESOLUTION NO. 2013 -140; AUTHORIZING SUBMITTAL OF COMMENTS TO THE MINNESOTA DEPARTMENT OF TRANSPORTATION (MNDOT) ON THE MINNESOTA STATE HIGHWAY INVESTMENT PLAN (MNSHIP) WHEREAS, MnSHIP is MnDOT's instrument for deciding and communicating capital investment priorities for their system for the next 20 years; and WHEREAS, the plan considers many factors when setting priorities, including federal and state law, system conditions, and public input, resulting in a set of investment priorities that vary over the next 20 years; and WHEREAS, MnSHIP is a fiscally constrained plan, meaning its planned expenditures must align with expected revenues; and WHEREAS, expected revenues total $18 billion, while the projected transportation needs on the state highway system total $30 billion leaving 40% unfunded needs within the 20 -year horizon; and WHEREAS, Community Services staff have reviewed the document and prepared a letter with comments for submittal to MnDOT; and WHEREAS, the primary comments include: • Support the completion of Highway 610 and the regional system • Support the inclusion of the inter - regional corridor system in the plan • Applaud MnDOT's efforts to move towards performance measures • Continue to work with local partners to leverage non -MnDOT funding sources • Support MnDOT's efforts to build support for additional transportation funding to address preservation, safety and mobility funding gaps • Recognize Transportation system and regional economic development relationship -SCALE TED Initiative WHEREAS, the comments above are included in the letter to MnDOT. BOARD OF COUNTY COMMISSIONERS SCOTT COUNTY, MINNESOTA Date: July 29, 2013 Resolution No.: 2013 -140 Motion by Commissioner: Seconded by Commissioner: NOW THEREFORE BE IT RESOLVED, that the Scott County Board of Commissioners hereby authorizes the submittal of comments to the Minnesota Department of Transportation (MNDOT) on the Minnesota State Highway Investment Plan (MNSHIP). • COMMISSIONERS VOTE Wagner r Yes r No r Absent r Abstain Wolf r Yes r No r Absent r Abstain Menden r Yes r No r Absent r Abstain Marschall r Yes r No r Absent I Abstain Ulrich r Yes r No r Absent r Abstain State of Minnesota) County of Scott ) 1, Gary L. Shelton, duly appointed qualified County Administrator for the County of Scott, State of Minnesota, do hereby certify that I have compared the foregoing copy of a resolution with the original minutes of the proceedings of the Board of County Commissioners, Scott County, Minnesota, at their session held on the day of , 2013 now on file in my office, and have found the same to be a true and correct copy thereof. Witness my hand and official seal at Shakopee, Minnesota, this day of , 2013. County Administrator Administrator's Designee plhlik.A11 SHAKOPEE July 16, 2013 Ryan Wilson MnDOT Office of Capital Programs and Performance Measures 395 John Ireland Blvd, MS 440 Saint Paul, MN 55155 Re: Minnesota State Highway Investment Plan (MnSHIP) On behalf of the Scott County Board of Commissioners and the City of Shakopee City Council we are jointly submitting the following comments regarding the Draft Minnesota 20- Year State Highway Investment Plan (MnSHIP). We applaud the state's efforts in putting together a realistic picture of constructing, operating, maintaining and managing the state's largest asset. We, through our SCALE partnership have learned the importance of our stewardship of the transportation system to maintain the quality of life for our residents and economic vitality of our communities, here in Scott County and throughout the state. The State system, managed by your agency, provides critical • linkages for the state's economy and multijurisdictional infrastructure such as freeways and major River Crossing which are difficult for local governments to provide on their own. As resources become tighter, we recognize that you will have difficult choices on where to make investments -we feel the focus on performance measurement targets will assist the state in aligning its limited resources to make progress towards the pavement, safely, bridge and mobility targets. This will provide more transparency to the public in how and why investment choices are being made. Within the metro area, we are encouraged that there is a focus on finishing the regional system by completing projects like Highway 610 and smaller strategic improvements to the regional system. We acknowledge that projects like the full reconstruction of 135W and 1494 interchange are not in the current planning horizon but we feel this system interchange plays a vital role in the state and region's economic health. We encourage MnDOT to keep projects of this magnitude and importance under development and aggressively pursue additional funding revenue. Its major projects such as this type of project, that will require collaboration amongst all of our organizations to get them completed. We believe it's a MnSHIP Comments — Page 2 disservice to the public to leave unacknowledged these unmet needs. It is a serious situation and we feel strongly that the state cannot continue on the current course where the percentage of pavements moving into the poor condition continue to increase even though there are no planned investments in expansion /mobility We are pleased to see the Interregional Corridor program included in MnSHIP as it has been lower in statewide emphasis during the last statewide plan. Through our work with the 169 corridor coalition we have learned to appreciate the importance that these corridors play in access to regional markets and the strong interdependence that exists between the metro and outstate sub - economies. We want to emphasize the importance the IRC's play in the movement of freight (goods and services) in, out and through the metro area. Providing a safe and reliability highway system connecting us together is important for the vitality of state. Within the twin cities metro area, we are pleased to see that mobility is a focus in the second ten years of MnSHIP. Mobility has a positive effect on both environmental quality and social standards. We agree that the managed lane system will be a way to deliver strategic mobility improvements with a high return on investment. We also think the vision of co- locating the transit way system within the highway system will provide an opportunity to cost effectively build capacity for both transportation modes makes sense. We want to acknowledge that through our partnership with MnDOT we have been able to contribute significant resources to help leverage quality regional partnership projects and we want you to know we are committed to continue building on those collaborative efforts. The County implemented a wheelage tax in 2007 and that revenue was dedicated through County Board action to projects of regional significance. Through that program we have been able to work with MnDOT and step up with funding resources for those regional projects that we have championed. • TH13 /Hwy 101 we were able to bring $2 miilion of wheelage tax and $7 million of regional federal dollars to the system. Paired with MnDOT resources of the equivalent amount we together were able to develop a partnership project that significantly improved mobility and access on a freight corridor of statewide importance. • Construction on TH 169 and County Highway 69 interchange will begin later this summer to remove a signal on TH169 and finish the last remaining element of the Shakopee bypass first envisioned in the mid 1970's. • Next year we will begin replacement of the Hwy 101 river crossing. In partnership we have worked together to solve a major flood mitigation need in the southwest metro area. Much of Scott County's local share will be funded by the wheelage tax proceeds. We are most eager to continue with more of these collaborative efforts. We feel local partnerships help enhance limited MNDOT resources making more projects possible. Through our Scott County Association for Leadership and Efficiency partnership we have made transportation an emphasis area. We stress the importance of being good stewards of the transportation resources we have in place though our annual education program focusing on coordinating economic development, land use planning and managing the transportation system. We are committed to work together to focus on regional priorities, one at a time. MnSHIP Comments — Page 2 We thank you for your attention to these comments, and welcome your interest in addressing the concerns of Scott County. Sincerely, Tom Wolf • Chair, Board of Commissioners Scott County • CITY OF SHAKOPEE, MINNESOTA RESOLUTION NO. 7333 RESOLUTION GRANTING A PROPERTY TAX ABATEMENT FOR CERTAIN PROPERTY IN THE CITY OF SHAKOPEE BE IT RESOLVED by the City Council (the "City Council ") of the City of Shakopee, Minnesota (the "City") as follows: Section 1. Recitals. 1.01. DataCard Corporation, a Delaware corporation, or any of its affiliates (the "Developer "), has proposed to acquire, renovate, equip, and construct an expansion to an approximately 275,000 square foot building currently consisting of manufacturing space for use as its corporate headquarters (the "Minimum Improvements ") on real property (the "Property") located in the City. 1.02. Pursuant to Minnesota Statutes, Sections 469.1812 through 469.1815 (the "Abatement Act "), the City has determined a need to grant a property tax abatement on the Property (the "Abatement ") to the Developer in order to finance a portion of the costs of the acquisition, construction, and equipping of the Minimum Improvements. 1.03. Scott County, Minnesota (the "County") is also considering granting the Developer a property tax abatement on the Property. 1.04. The Abatement proposed to be provided to the Developer by the City to help finance the Minimum Improvements constitutes a business subsidy under Minnesota Statutes, Sections 116J.993 to 116J.995 (the "Business Subsidy Act "). 1.05. This City Council has reviewed information concerning the above - referenced Minimum Improvements. 1.06. On the date hereof, the City Council conducted a duly noticed joint public hearing with the Board of Commissioners of the County on the Abatements proposed to be granted by the City and the County, as well as the business subsidy to be provided to the Developer. The views of all interested persons were heard and considered at the public hearing. 1.07. The City intends to enter into a Contract for Private Development (the "Contract for Private Development ") with the Developer, which shall set forth the terms of the Abatement and other financial assistance proposed to be provided by the City to the Developer. Section 2. Findings. 2.01. The recitals set forth above are incorporated into this Resolution. 2.02. It is hereby found and determined that the benefits to the City from the Abatement will be at least equal to the costs to the City of the Abatement, because (a) the City believes that the development to be facilitated is not reasonably likely to occur absent the Abatement, (b) the development to be facilitated by the Abatement will likely encourage additional development within the area, and (c) the 427754v2 JAE SH155 -317 long -term taxes collected from the Property after termination of the Abatement will „xceed the amount of the Abatement returned to the Developer. 2.03. It is hereby found and determined that the Abatement is in the public interest because such action will increase the City's tax base and provide additional employment opportunities in the City. 2.04. It is further specifically found and determined that the Abatement is expected to result in the following public benefits: (a) Creation of an estimated $4,500,000 increase in market value for property tax purposes, which will be available to all taxing jurisdictions after expiration of the Abatement (commencing in 2026); and (b) Provision of the relocation of an estimated 680 jobs to the City and the creation of an estimated 126 new jobs in the City. Section 3. Actions Ratified; Abatement Approved 3.01. The City Council hereby ratifies all actions of the City's staff and consultants in arranging for approval of this Resolution in accordance with the Abatement Act and the Business Subsidy Act. 3.02. Subject to the provisions of the Abatement Act, the Abatement is hereby approved and adopted subject to the following terms and conditions: (a) The term "Abatement" means the real property taxes generated in any tax - payable year by extending the City's total tax rate for that year against the tax capacity increase resulting from the Minimum Improvements constructed on the Property, excluding the tax capacity of the land and the existing building (in the amount of $9,800,000, as established in tax payable year 2013) and excluding the portion of the tax capacity attributable to the areawide tax under Minnesota Statues, Chapter 473F, all as of January 2 in the prior year. (b) The Abatement will be paid by the City to the Developer on the dates and in accordance with all the terms and conditions of the Contract for Private Development. (c) In accordance with Section 469.1813, subdivision 8 of the Abatement Act, in no year shall the Abatement, together with all other abatements approved by the City under the Abatement Act and paid in that year exceed the greater of 10% of the net tax capacity of the City for that year or $200,000 (the "Abatement Cap "). The City may grant other abatements permitted under the Abatement Act after the date of this Resolution, provided that to the extent the total abatements in any year exceed the Abatement Cap, the allocation of Abatement Cap to such other abatements is subordinate to the Abatement granted pursuant to this Resolution. (d) The Abatement will have a maximum term of eleven years and shall be collected in the years 2014 through 2024. (e) In no event shall the total payments of Abatement to the Developer exceed $334,869 or continue to be paid for more than eleven years. (f) The Abatement is subject to modification in accordance with the Abatement Act, subject to the terms of the Contract for Private Development. 427754v2 JAE SH155 -317 2 (g) In accordance with Section 469.1815 of the Abatement Act, the City will add to its levy in each year during the term of the Abatement the total estimated amount of current year Abatement granted under this Resolution. (h) The City makes no warranties or representations regarding the amount or availability of the Abatement. (i) The Abatement shall be provided to the Developer pursuant to the terms and conditions of the Contract for Private Development, as approved by the City Council. Section 4. Restrictions on Abatement. The Abatement granted pursuant to this Resolution shall not commence until the following conditions are satisfied: (a) The City and Developer mutually agree on the terms and conditions of a Contract for Private Development. (b) If the County approves an abatement for the Property and joins as a party to the Contract for Private Development, the City, the Developer, and the County mutually agree on the terms and conditions of a Contract for Private Development. (c) The Developer purchases the Property and locates a portion of its operations to the City. Section 5. County Participation. The Mayor and City Administrator are authorized to work with the County if it chooses to abate a portion of their portion of the property taxes for the benefit of the Developer, including but not limited to drafting the Contract for Private Development and administering the payment of the County's abatement dollars. Section 6. Effective Date. This Resolution is effective upon execution in full of the Contract for Private Development. Approved by the City Council of the City of Shakopee, Minnesota this 29 day of July, 2013. Mayor ATTEST: Finance Director /City Clerk 427754v2 JAE SH155 -317 3 EXHIBIT A TO ABATEMENT RESOLUTION PROPERTY Part of Lot 1, Block 2, Valley Park 11 Addition, lying South of a line commencing at the Northeast corner of said Lot 1 Block 2, thence proceeding South along the East line 447 feet to the point of beginning of the land to be described, thence West for 797.52 feet to the West line of said Lot 1, Block 2 and there terminating. The West 22 feet of the South 743.31 feet of Lot 1, Block 1, Valley Park 9th Addition. 427754v2 JAE SH155 -317 A_1 GREATER MSP Minneapolis Saint Paul Regional Economic Development Partnership Datacard Group — Economic Impact As requested, economic impact estimates have been compiled for the proposed Datacard expansion on the Minneapolis -St. Paul metropolitan area. This memo enumerates the total (direct, indirect and induced) economic impact. There are two pieces to this impact estimate. The construction phase is a one -time impact that creates economic activity during the building process, but then goes away once building is complete. The operations phase impact estimate examines a two year scale up of operations. If the company maintains the level of business operations as projected, the operations phase has ongoing impact. Summary • The results indicate that for every 1 job created at Datacard, another 1.2 jobs are created elsewhere in the economy. • Over the construction and 2 year scale up phase, over $30 million in wages will be paid out and over $1.5 million in new tax revenue generated. • There is an estimated $3,300 per operations job in new tax revenue generated for the state. Approximately $1,180 of that is estimated to be new local tax revenue. Based on previous experience with firms, approximately 15% of employees are likely to reside in the local community. This suggests approximately $49,000 in new local tax revenue annually when the firm is at full employment levels. Further, if 15% of the retained employees also move to the local community, another $118,000 of new local tax revenue may be generated. • The wages of the direct jobs will average in the mid - $90,000 range, while the indirect and induced jobs will average in the $37,000 range. 1 In what is often called either a ripple effect or multiplier effect, increased economic activity triggers additional spending. The total economic impact of the economic activity is the sum of three effects: The direct effect (the change in activity that stimulates other activity, in this case construction or an increase in employment), the indirect effect (resulting from industries purchasing from other industries due to increased demand) and induced effects (resulting from the expenditure of new household income generated by the direct and indirect effects). GREATER M Minneapolis Saint Pau; Regional Economic Development Partnership Project Overview Construction Phase: Construction - related costs for the project, as provided by Datacard, are estimated to be $7.2 million (renovation and construction) with $2.3 million in new equipment and fixture related purchases. Operations Phase: When construction is complete, Datacard estimates they will employ 126 new workers over two years. For the purposes of this analysis, it is assumed 63 workers begin in year 1, and an additional 63 are hired in year 2. Datacard estimates an average wage of approximately $95,000 for those workers. Datacard estimates they will also relocate 680 professional and production jobs from Minnetonka. Approximately 500 of those positions will have average wages of $90,000 or more, with the remaining positions in the range of $45,000. These positions are not analyzed in the table below because they are not new to the metro -wide economy. However, the relocation may induce some workers to shift their residence closer to the new facility. Assuming 15% choose to move closer to the new facility, this may mean 100 new workers for the local community. Economic Impact of Datacard Facility Construction Operations: Scale Up 2013 2014 2015 Employment (Direct) 50 63 126 Employment (Indirect, Induced) 51 76 152 Wages and Salaries (Direct, $M) $2.2 $6.0 $11.9 Wages and Salaries (Indirect, Induced, $M) $1.9 $2.9 $5.7 GDP (Direct, $M) $3.9 $5.5 $11.0 GDP (Indirect, Induced, $M) $4.5 $6.7 $13.4 Estimated State Tax Revenue Generated by Employees ($thousands) $179 $459 $918 Dollars are not adjusted for inflation. This analysis excludes changes in government spending from reduced revenue collections, and assumes that workers will either be (a) moving in from out of state and living in newly built housing or (b) are currently unemployed, buy no taxable goods, and live in untaxed property. Source: Analysis conducted with IMPLAN 3.0; 2013 Tax Incidence Study, Minnesota Department of Revenue. Prepared by: Research & Analysis, Minneapolis Saint Paul Regional Economic Development Partnership (GREATER MSP). Analysis dated: July 11, 2013. Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Springsted Tel: 651-223-3000 Fax: 651 - 223 -3002 www.springsted.com DRAFT MEMORANDUM TO: Mark McNeill, City Administrator Julie Linnihan, Finance Director Samantha DiMaggio, Economic Development Coordinator FROM: Mikaela Huot, Vice President/Consultant CC: Renee Christianson, Business Development, Senior Analyst, Scott County CDA Paul Steinman, Vice President/Client Representative DATE: July 22, 2013 SUBJECT: Tax Abatement revenue projections for proposed Datacard new development project The City has requested that Springsted provide preliminary tax abatement revenue projections for a proposed new project that includes the acquisition and renovation of an existing facility within the City of Shakopee. Following a preliminary analysis prepared by Springsted based on certain value assumptions of the project, additional information has been made available resulting in changes to the projected revenues. In addition, the City has requested that preliminary property tax payments for the project be included. As a result, this memo is an update to previous correspondence. Development assumptions include the renovation of an existing building, for which a tax abatement project would be created to capture taxes generated from the new building through an annual abatement levy. The anticipated build - out of the facility is projected to commence with acquisition in late 2013 with construction commencing in 2014 and be complete by December 31, 2014. Therefore taxes paid in full on the proposed project would occur in taxes payable 2016. In addition, a market value increase is expected to occur for taxes payable 2014 and the proposed tax abatement includes the first two years of the market value increase followed by 9 years of the original market value increase and resulting from the company relocation. The City of Shakopee has traditionally provided up to 9 years of tax abatement assistance similar to the terms of an economic development district for proposed new projects. However, in certain cases in which a particular company Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 2 that has located within the Dean Lakes business park has provided greater employment opportunities with higher wages, the City of Shakopee has considered providing up to 15 years of tax abatement assistance. For purposes of the updated preliminary analysis we are including two alternate market values scenarios, Scenario 1: Low EMV with $2.5M of new building value and Scenario 2: High EMV with $4.5M of new building value, based on preliminary value information provided by Scott County. For both value scenarios we are illustrating the potential revenue generated by both the City and Scott County. Participation by each taxing entity is subject to policy review and approval. In addition, the market value increase expected for taxes payable 2014 is $2,160,000. Additional assumptions and terms of the proposed abatement are outlined further below. The purpose of this memo is to provide financial projections for proposed tax abatement assistance based on 100% of the annual tax abatement revenues for 11 years, with City and County participation. Two years includes the market value increase in taxes payable 2014 ($2,160,000) followed by 9 years with the additional market value increase resulting from the relocation of the new company ($2.5M and $4.5M, respectively). Tax Abatement Assumptions Springsted made certain assumptions to calculate the estimated amount of tax abatement revenues generated by the proposed project. Those assumptions include the following: Tax Abatement A city may grant a tax abatement, by contract or otherwise, of the taxes imposed by the city on a parcel of property, which may include personal property and machinery, or defer the payments of the taxes and abate the interest and penalty that otherwise would apply, if: • it expects the benefits to the city of the proposed abatement agreement to at least equal the costs to the city of the proposed agreement or intends the abatement to phase in a property tax increase, as provided in clause (2)(vii); and • it finds that doing so is in the public interest because it will: o increase or preserve tax base; o provide employment opportunities in the political subdivision; o provide or help acquire or construct public facilities; o help redevelop or renew blighted areas; o help provide access to services for residents of the political subdivision; o finance or provide public infrastructure; o phase in a property tax increase on the parcel resulting from an increase of 50 percent or more in one year on the estimated market value of the parcel, other than increase attributable to improvement of the parcel; or Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 3 o stabilize the tax base through equalization of property tax revenues for a specified period of time with respect to a taxpayer whose real and personal property is subject to valuation under Minnesota Rules, chapter 8100. For our preliminary tax abatement scenarios we used the following assumptions: • Revenue projections were prepared for two market value estimates o Scenario 1: Low EMV with incremental market value of $2.5M o Scenario 2: High EMV with incremental market value of $4.5M • Estimated market value information provided by Scott County • Existing land and building value would not be abated (as of assess 2012 for taxes payable 2013) o Parcel ID: 27- 176002 -0 • Payable 2013 EMV of $9,800,000 o Parcel ID: 27- 154001 -1 • Payable 2013 EMV of $40,000 o Total non - abated market value of $9,840,000 • Abate market value increase commencing in taxes payable 2014 o $2,160,000 ($12,000,000 from $9,840,000) • Abate new building value commencing in taxes payable 2016 o Scenario 1: Low EMV with incremental market value of $2.5M o Scenario 2: High EMV with incremental market value of $4.5M • Proposed abatement term o 2 years — market value increase of $2,160,000 o 9 years — market value increase of $2,160,000 plus increase of $2.5M or $4.5M, respectively o 11 years — total abatement • Both scenarios illustrate potential City and County participation • Abatement participation o 100% participation City and County • Construction schedule o Construction commences in 2013 and completes in 2014 • 100% assessed in January of 2015 for taxes payable in 2016 • Payable 2013 tax rates remain constant through abatement term o City: 41.996% o County: 40.674% o School: 39.715% o Other: 5.701% o Total: 128.086% • Current class rates remain constant through abatement term • Fiscal Disparities contribution rate o 2013 contribution rate of 39.1355% Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 4 o Contribution made from new tax abatement project • Phased in annual market value inflator assumed o 0% years 1 -5 o 1% years 6 -8 o 2% years 9 -11 • Present value date of August 1, 2013 • Present value (discount rate) of 4% Tax Abatement Revenue Estimates Scenario 1: Scenario 2: Low EMV High EMV Estimated Incremental New Building Market Value $2,500,000 $4,500,000 2014 Annual Abatement Revenue: $11,042 $11,042 City share with $2,160,000 market value increase 2014 Annual Abatement Revenue: $10,694 $10,694 County share with $2,160,000 market value increase 2016 Annual Abatement Revenue: $23,823 $34,047 City share upon completion of new project in 2014 2016 Annual Abatement Revenue: $23,072 $32,975 County share upon completion of new project in 2014 2016 Total Annual Abatement Revenue upon completion in 2014 $46,895 $67,021 Estimated Total City Abatement Revenue over 9 years $240,022 $334,869 Estimated Total County Abatement Revenue over 9 years $232,464 $324,324 Estimated Total Tax Abatement Revenue over 9 years $472,486 $659,193 Estimated Present Value of Revenues (Combined City and County) $371,787 $515,376 (4% discount rate) Estimated Total Property Tax Payment commencing 2016 based $572,784 $651,986 upon building completion in 2014 Thank you for the opportunity to be of assistance to the City of Shakopee. Please let us know how we can best assist you as this project moves forward and should you have any questions please feel free to contact us. Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 5 Tax Abatement Revenue Projections for Scenario 1: Low EMV with Estimated Building Market Value of $2.5M with 9 -Year Term and 100% Annual Abatement Revenues Available for Project Projected Tax Abatement Report City of Shakopee, Minnesota Proposed New Tax Abatement Project - Datacard City and County Participation Low Value Scenario with Building Value of $2.5M Two years of abatement on existing building value increase (2014 -2015) and Nine years on expansion (2016 -2024) - incremental MV Inflator and 100% abatement Less: Non- Less: Retained Times: City County School District PV Total PV City PV County Total Annual Total Total Abated Fiscal Captured Tax Annual Abatement Abatement Abatement Total Abatement Abatement Abatement Estimated Period Market Net Tax Net Tax Disp. @** Net Tax Capacity Total Revenues "" Revenues "" Revenues Tax Revenues Revenues Revenues Property Ending Value ") Capacity Capacity ' 39.1355% Capacity Rate ". Tax 42.00% 40.67% 39.72% Abatement 08/01/13 08/01/13 08/01/13 Tax Pymt (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) 4.00% 4.00% 4.00% 12/31/13 9,840,000 196,050 196,050 0 0 128.086% 0 0 0 0 0 0 0 0 388,244 12/31/14 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 21,107 10,722 10,384 473,782 12/31/15 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 20,295 10,310 9,985 473,782 1 12/31/16 14,500,000 289,250 196,050 36,474 56,726 128.086% 72,658 23,823 23,072 0 46,895 42,100 21,387 20,713 572,784 12/31/17 14,500,000 289,250 196,050 36,474 56,726 128.086% 72,658 23,823 23,072 0 46,895 40,481 20,564 19,917 572,784 12/31/18 14,500,000 289,250 196,050 36,474 56,726 128.086% 72,658 23,823 23,072 0 46,895 38,924 19,773 19,151 572,784 12/31/19 14,525,000 289,750 196,050 36,670 57,030 128.086% 73,047 23,950 23,196 0 47,147 37,628 19,115 18,513 573,774 12/31/20 14,550,250 290,255 196,050 36,868 57,337 128.086% 73,441 24,079 23,321 0 47,401 36,375 18,479 17,897 574,774 12/31/21 14,575,753 290,765 196,050 37,067 57,648 128.086% 73,839 24,210 23,447 0 47,657 35,166 17,864 17,302 575,784 12/31/22 14,627,268 291,795 196,050 37,470 58,275 128.086% 74,642 24,473 23,702 0 48,175 34,181 17,364 16,817 577,823 12/31/23 14,679,813 292,846 196,050 37,882 58,914 128.086% 75,461 24,742 23,963 0 48,704 33,227 16,879 16,348 579,904 12/31/24 14,733,409 293,918 196,050 38,301 59,567 128.086% 76,297 25,016 24,228 0 49,244 32,303 16,410 15,893 582,027 $732,057 $240,022 $232,464 $0 $472,486 $371,787 $188,867 $182,920 $6,518,244 1 1l includes expected market value increase in 2014 for PID 271760020 to be captured thru abatement commencing in 2014 ' Base value based on existing land and bulding value. Abated value includes new estimated land building of $2.5M PID: 271760020 $9,800,000 "Fiscal disparities contribution from incremental building growth PID: 271540011 $40,000 State C -I Tax Rate 52.52% "" Final payable 2013 tax rate based on information provided by County (taxing code 2204 2013 Existing Market Value $9,840,000 Public Sector Advisors City of Shakopee, Minnesota Proposed New Tax Abatement Project: Datacard July 22, 2013 Page 6 Tax Abatement Revenue Projections for Scenario 2: High EMV with Estimated Building Market Value of $4.5M with 9 -Year Term and 100% Annual Abatement Revenues Available for Project Projected Tax Abatement Report City of Shakopee, Minnesota Proposed New Tax Abatement Project - Datacard City and County Participation High Value Scenario with Building Value of $4.5M Two years of abatement on existing building value increase (2014 -2015) and Nine years on expansion (2016 -2024) - incremental MV Inflator and 100% abatement Less: Non- Less: Retained Times: City County School District PV Total PV City PV County Total Annual Total Total Abated Fiscal Captured Tax Annual Abatement Abatement Abatement Total Abatement Abatement Abatement Estimated Period Market Net Tax Net Tax Disp. @ *" Net Tax Capacity Total Revenues * * "* Revenues * *" Revenues Tax Revenues Revenues Revenues Property Ending Value t'l Capacity Capacity ' 39.1355% Capacity Rate * ** Tax 42.00% 40.67% 39.72% Abatement 08/01/13 08/01/13 08/01/13 Tax Pymt (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) 4.00% 4.00% 4.00% 12/31/13 9,840,000 196,050 196,050 0 0 128.086% 0 0 0 0 0 0 0 0 388,244 12/31/14 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 21,107 10,722 10,384 473,782 12/31/15 12,000,000 239,250 196,050 16,907 26,293 128.086% 33,678 11,042 10,694 0 21,737 20,295 10,310 9,985 473,782 12131/16 16,500,000 329,250 196,050 52,128 81,072 128.086% 103,841 34,047 3Z975 0 67,021 60,169 30,566 29,603 651,986 12/31/17 16,500,000 329,250 196,050 52,128 81,072 128.086% 103,841 34,047 32,975 0 67,021 57,855 29,390 28,465 651,986 12/31/18 16,500,000 329,250 196,050 52,128 81,072 128.086% 103,841 34,047 32,975 0 67,021 55,630 28,260 27,370 651,986 12/31/19 16,545,000 330,150 196,050 52,481 81,619 128.086% 104,543 34,277 33,198 0 67,474 53,851 27,356 26,495 653,768 12/31/20 16,590,450 331,059 196,050 52,836 82,173 128.086% 105,251 34,509 33,423 0 67,932 52,131 26,483 25,649 655,568 12/31/21 16,636,355 331,977 196,050 53,196 82,731 128.086% 105,967 34,744 33,650 0 68,394 50,467 25,637 24,830 657,385 12/31/22 16,729,082 333,832 196,050 53,922 83,860 128.086% 107,413 35,218 34,109 0 69,327 49,188 24,987 24,201 661,058 12/31/23 16,823,663 335,723 196,050 54,662 85,011 128.086% 108,887 35,701 34,577 0 70,278 47,945 24,356 23,589 664,802 12/31/24 16,920,136 337,653 196,050 55,417 86,186 128.086% 110,392 36,195 35,055 0 71,250 46,738 23,743 22,995 668,624 $1,021,332 $334,869 $324,324 $0 $659,193 $515,376 $261,810 $253,566 $7,252,969 /'l includes expected market value increase in 2014 for PID 271760020 to be captured thru abatement commencing in 2014 * Base value based on existing land and bulding value. Abated value includes newestimated land building of $4.5M PID: 271760020 $9,800,000 "Fiscal disparities contribution from incremental building growth PID: 271540011 $40,000 State C -I Tax Rate 52.52% *' Final payable 2013 tax rate based on information provided by County (taxing code 2204 2013 Existing Market Value $9,840,000 Public Sector Advisors