Adoption of the attached resolution.

On April 13, 2026, the EDA reviewed a draft tax abatement policy and application. Due to an increase in inquiries regarding the use of tax abatement, and given the flexibility associated with this financing tool, staff recommended the development of a formal policy to guide its usage.

During the meeting, the EDA discussed whether certain uses could be excluded from consideration under a tax abatement policy. Staff subsequently consulted with the City Attorney, who advised that the City may exclude specific uses; however, that there may be circumstances in which flexibility is warranted, as some projects may provide unique benefits or incentives to the City. The City is not obligated to grant a tax abatement in any instance. Approval requires a finding that the benefits of the abatement meet or exceed the associated costs and that the abatement serves a public purpose consistent with at least one of the criteria outlined in Minnesota Statutes § 469.1813.

The EDA also discussed application fees, specifically whether applicants requesting Tax Increment Financing (TIF) should be required to pay a separate application fee for tax abatement if TIF is not approved. Staff recommends that all applications requesting TIF include the applicable application fee, and all applications requesting tax abatement include the applicable application fee. Staff work closely with applicants to evaluate project eligibility for available programs and will advise applicants if a project appears ineligible prior to submission. However, if an applicant chooses to proceed with a TIF application that is ultimately deemed ineligible, the City will still incur costs associated with its TIF consultant, as well as potential additional costs related to the review of a tax abatement request. Accordingly, clarifying language regarding application fees has been added to the attached policy.

Attached is an updated draft tax abatement policy and application. The updated draft includes redline to view the changes. Changes include adding a qualification within Section V to consider requests for affordable housing and that projects shall not place an unreasonable or disproportionate burden on the City’s public infrastructure or utilities.

The requested action is adoption of the attached resolution approving the tax abatement policy.