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For more information contact Community Planning/Economic Development Director Gary Walz at gwalz@cityofmelrose.com, 320-256-4278.
Tax Increment Financing (TIF): Minnesota Statutes, Section 469
Tax Increment Financing (TIF) uses the increased property taxes generated by new real estate development within tax increment financing districts to pay for certain eligible costs associated with the development. The value that is “captured” (i.e., the increase in value over the year the TIF district was established) generates property taxes. These “incremental” taxes go to the City's development authority or the city authority rather than to the county, school, city, or other taxing districts that normally share in the total property tax bill. The captured taxes are used to subsidize eligible project costs such as land acquisition, demolition, public and site improvements, and related consulting and administrative costs. The value of the property prior to development (i.e., the “non-captured” portion) continues to generate property taxes which are distributed to all taxing jurisdictions.
Revolving Loan Fund (RLF)
The purpose of the City's Revolving Loan Fund is to provide gap financing to eligible credit-worthy businesses for expansion or modernization of existing or new facilities that create or retain jobs. Manufacturing, industrial, commercial, and retail businesses within the City are eligible to apply for these funds. Preference is given to applications paying a livable wage. Companion loans can be made to credit-worthy businesses meeting the loan fund criteria and receiving approval of the City's Revolving Loan Fund Committee. The term for most loans is in the five to ten year range.
Job Opportunity Building Zones (JOBZ)
The goal of the State's JOBZ program is to stimulate economic development activity in Greater Minnesota by providing local and state tax exemptions. JOBZ tax incentives will help new and expanding companies lower their overall costs and will help facilitate their growth and prosperity. To qualify for the JOBZ tax exemptions, a business must start-up in a sub-zone, relocate from outside of a sub-zone or expand into a sub-zone. Non-retail commercial or industrial business must create at least one new full-time job. The living wage floor for wages and health benefits to be paid for the job(s) created shall be 110% of the most current national Poverty Guideline for a family of four, as established in the Federal Register by the US Department of Health and Human Services. The City will seek to create jobs with higher wages as appropriate for the overall public purpose of the subsidy. Increase your business profits by relocating or expanding to one of the City's 173.90 acres JOBZ sub-zone properties as identified on the map of Available Land under Development. The City has the flexibility to relocate JOBZ acres within the community to accommodate business development.
GAP Financing (Initiative Foundation)
The Direct Business Loan Program is designed to help central Minnesota companies create or retain quality jobs by filling gaps in business financing packages. Targeted industries include value-added agriculture, natural resource-based manufacturers and industries utilizing technology in manufacturing processes.
Loans are available from $50,000 to $250,000.
The Microenterprise Loan Guarantee Program is designed to increase local ownership or expansion of small businesses, especially among underserved populations who may find it difficult to access capital through traditional lending institutions. The fund protects banks and lenders against loan default by underwriting up to $50,000 through a simple guarantee contract.
The Initiative Foundation may guarantee up to $50,000 or 80% of the original loan balance, whichever is less.
The Seed Capital Fund is designed to further emerging entrepreneurial ventures by financing product concept, development and market research. Preference is given to projects exhibiting potential for substantial growth through the introduction of new products and services. In return for Seed Capital Fund investments, the Initiative Foundation may negotiate company equity or royalties that reflect the incurred risk.
The maximum investment is $50,000.
For additional information on these programs, visit the Initiative Foundation's website at http://www.ifound.org/.
Business Improvement Subsidy Program (BISP)
The Business Improvement Subsidy Program (BISP) was designed to stimulate and preserve businesses in Melrose by providing access to low cost loan funds. The Business Improvement Committee pays an upfront 10% reduction of qualified project costs payable upon completion. The maximum qualified project costs would be $25,000 with $2,500 being the maximum amount of incentive. The program would operate City-wide and be available for renovated or new commercial and industrial projects. The program could not be used in conjunction with projects receiving tax increment or revolving loan fund assistance.
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