Financial Resources and Incentive Programs
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The Luverne Economic Development Authority has a number of financial resources available to assist business and industry. In this section you will find some general information on how economic development projects are funded along with a summary of the financial resources available.
The first rule of economic development finance is that “There is no free money.”
The days of grants for economic development projects, if they ever did exist, are few and far between. Today economic development projects are funded primarily through owner equity and private bank financing, with economic development funds available for “gap financing.”
Many times, particularly with economic development projects, owner equity and conventional bank financing do not provide all the funding that is required. Typically, this occurs because the bank has lending limits they must adhere to, there is inadequate equity, there is insufficient collateral or the business cannot afford market interest rates and/or term requirements.
Generally speaking, economic development financial tools exist to fill this funding “gap.”
Typically, an economic development financing deal looks like this:
We do not compete with banks and in no instance will economic development financing replace bank financing. Public financing exists solely to supplement private financing in order to move worthwhile economic development projects forward.
If you are interested in a Gap Financing loan, please contact Holly at 507-449-5033 or email email@example.com
TAX INCREMENT FINANCING
The Luverne Economic Development Authority is willing to consider the employment of Tax Increment Financing (TIF) for eligible projects. In a nutshell, the difference between a property’s original property taxes and the property taxes due on a property after it has been improved (called the “tax increment”) can be captured and used to help finance the project.
To induce or cause a development or redevelopment that otherwise would not occur - for example, to convince a developer to build an office building, retail, industrial, or housing development that otherwise would not be constructed. To do so, the increased property taxes are used to pay for costs (ex. land, acquisition, or site preparation) that the developer would normally pay.
To finance public infrastructure (streets, sewer, water, or parking facilities) that are related to the development. In some cases, the developer would be required to pay for this infrastructure through special assessments or other charges, in other cases, all taxpayers would pay through general city taxes.
In all cases the proposed project must pass what is called the “but-for” test, meaning that unless Tax Increment Financing is utilized, the project will not be economically feasible. In other words: if the project can be done without TIF, then it is ineligible for this assistance.
For economic development purposes, two types of Tax Increment Financing districts are available: Economic Development TIF districts for new developments and Redevelopment TIF districts to help with the costs of renovating or replacing substandard buildings and redeveloping blighted areas.
Economic Development TIF District – An 8-year district that can provide funds for land acquisition, infrastructure (street, water & sewer, parking, etc.), grading & excavating and / or site improvements. Primarily for manufacturing and other industrial-type projects.
Tax abatement is a tool used for development purposes. It is a tax rebate rather than an exemption from paying taxes. The City of Luverne and LEDA use this as an additional tool to lower initial start-up, relocation, or retention costs over a certain time period. Abatement levels are determined by participating jurisdictions (City, County, and School District).
With Tax Abatement, the city rebates its portion of property taxes back to the property owner who then uses it to help offset development and / or redevelopment costs. Tax abatement is simpler and less restrictive than tax increment financing, and is quite useful for smaller projects.
In addition, the availability of tax abatement is limited – in any given year, for all economic development projects taking place, the city can abate an amount equaling no more than 10% of its current tax levy.
The Luverne City Council must approve all tax abatements.
To support the revitalization of Main Street and downtown Luverne, the city has created a program to encourage businesses to make history again, restoring buildings as closely as possible to their historic appearance from 1878-1948.
The Historic Facade Improvement Program offers FREE technical assistance for architectural design services as well as financial assistance in the form of loans and grants. As a part of this program, owners can drastically reduce the cost restoring a building to its historic appearance with funding assistance as follows:
• 35% low interest loan
• 35% grant
• 30% owner contribution
|Funds may be used for, but not limited to:|
Click HERE to download the Historic Facade improvement Program Application.
ENERGY INCENTIVE LOAN & REBATE PROGRAM
Loans up to $5000 offered at 0% interest for 5 years are available to businesses for qualified Bright Energy Solutions projects.
Eligible projects include lighting for new construction, lighting retrofits, heating and cooling, motors, pumps, VFDs and custom incentives.
As long as your project qualifies for Bright Energy Solutions rebates, it will be eligible for the loan program. We can send a specialist directly to your business - at no cost to you- to find the best energy efficient upgrades for you!
All loans are 0% interest
$1000 loan 1 Year
$2000 loan 2 Years
$3000 loan 3 Years
$4000 loan 4 years
Monthly payments can be added to the customer's utility bill for added convenience.
Missouri River Energy Systems (MRES) and Luverne Municipal Utilities
Clean Energy Resource Teams
Center Point Energy
ECONOMIC DEVELOPMENT UTILITY RATE
The City of Luverne benefits from a municipally owned electric utility which provides low electric rates. The Economic Development Utility Rate is an additional tool used by the LEDA to reduce costs for a business locating in Luverne beyond the existing low rates.
The purpose of Demolition Program is to beautify the City of Luverne through demolition of irreparable and substandard structures, both commercial and residential. Grants of $5000 (Commercial) and $3000 (Residential) are available to assist in the cost of removal of substandard or irreparable structures.
Applicant must make the case that the removal of the substandard structure will improve the overall value of the property.
The following items must be submitted with an application:
• Review of Building Demolition Code and pre-approval from the Building Official
• Plot plan of property which must include legal description, street address, and lot dimensions
• Copy of property's most current estimated market value, including a breakdown of land value and structure value
• Copy of Purchase Agreement or Deed showing total acquisition cost and proof of ownership
• Bid/Estimate for demolition and disposal costs from contractor
Click HERE to download an application for a demolition grant.
EMPLOYEE RELOCATION ASSISTANCE / DISCOUNTED RESIDENTIAL LOTS
Employee Relocation Assistance may be provided to key personnel to assist in moving costs. Discounted Residential Lots are also available for key and regular employees in our new residential developments. We will strive to create a custom program and assistance package that specifically meets the needs of your start-up or expanding business! Click here to see the available lots.