Lakeville strives to be competitive in attracting and retaining a diverse business economy. Lakeville’s development toolbox includes incentives at the City, County and State level and can assist eligible businesses with the incentives and support they need to thrive in our growing community.
City Incentives for Development
The Lakeville Business Subsidy Policy (PDF) defines the goals and objectives the City of Lakeville and Economic Development Commission have established in order to provide public assistance for private development or redevelopment activities. These public incentive programs include Tax Increment Financing (TIF) and Tax Abatement.
The City of Lakeville is granted the power to utilize Tax Increment Financing (TIF) by the Minnesota Tax Increment Financing Act. TIF is a public financing tool available to municipalities in Minnesota to encourage desirable development or redevelopment that would not otherwise occur but for public assistance. There are several types of TIF Districts, but the City of Lakeville most often has created Economic Development TIF Districts which collect tax increment for eight years.
How does it work?
When a TIF district is created, the county auditor certifies the current tax capacity of the property as the TIF district's original tax capacity (the base valuation). During the life of the TIF district, all taxing authorities (city, county and school district) will continue to receive the original tax rate applied to the base valuation.
Then as the property increases in value, the increase above the original tax capacity is "captured" and that tax increment is used to pay debt or other financial obligations necessary to complete the project on a “pay-as-you go” basis.
A TIF district is closed when all obligations are met, meaning all taxing authorities then benefit from the new, higher property valuation and tax base.
Does my project qualify?
If a development project is interested in pursuing TIF, the project will need to meet the City’s established goals and objectives for economic development, as well as meet state statute requirements and pass the “but-for” test.
The Lakeville Tax Increment Financing Policy (PDF) defines the fundamental purpose of TIF in the City. This policy reserves the right to approve or reject projects on a case-by-case basis, taking into consideration established policies and procedures, project criteria and demand on City services in relation to the potential benefits from the project. Of note, meeting policy criteria does not guarantee the award of business assistance to the project.
What’s the application process?
Interested parties are encouraged to contact Tina Goodroad, Community Development Director to discuss their project and its merits for TIF assistance. An application and nonrefundable fee of $500 is required for review. If preliminary approval is granted, the applicant submits the final application fee of $5,500 and a Tax Increment Financing Plan, along with all necessary notices, resolutions and certificates are prepared by City staff and/or consultants.
The City of Lakeville is granted the power to utilize Tax Abatement by Minnesota Statute.
The fundamental purpose of economic development property tax abatement (PDF) in Lakeville is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided.
How does it work?
An economic development tax abatement allows the City to grant an abatement that will benefit a property in one of a number of ways, including by reducing property taxes, deferring payment of property taxes or spending the money directly on improving the property.
In order to grant an abatement, the benefits of the abatement must be equal to or exceed its costs and serve the public good, such as increasing the tax base, redeveloping blighted areas or providing employment opportunities, public facilities or access to services.
The length or term of any Tax Abatement assistance will be based on need for each project as determined by the City. No matter how the political subdivision implements the abatement, the amount of the abatement is added to the subdivision’s property tax levy, which is collected through taxation on all properties in the subdivision, including the parcel receiving the abatement.
Does my project qualify?
The City of Lakeville will consider the use of Tax Abatement to assist private development projects that will achieve one or more of the objectives outlined in its Tax Abatement Policy (PDF). The City reserves the right to approve or reject projects on a case-by-case basis, taking into consideration established policies, project criteria and demand on City services in relation to the potential benefits from the project.
Before granting an abatement, the City must hold a public hearing and adopt a resolution that specifies the terms of the abatement agreement with the landowner. In exchange for the abatement, the landowner agrees to develop the land in a way that will promote Lakeville’s economic development goals.
What’s the application process?
Interested parties are encouraged to contact Tina Goodroad, Community Development Director to discuss their project and its merits for Tax Abatement assistance. An application and nonrefundable fee of $500 is required for review. If preliminary approval is granted, the applicant submits the final application fee of $3,000 and the process for creating a Tax Abatement project area, including all necessary notices, resolutions and certificates prepared by City staff and/or consultants begins.
State Incentives for Development
The Minnesota Department of Employment and Economic Development (DEED) offers business financing programs that may be able to help with your project.
The Minnesota Investment Fund (MIF) provides financing to help add new workers and retain high-quality jobs on a statewide basis. The focus is on industrial, manufacturing and technology-related industries to increase the local and state tax base and improve economic vitality statewide.
Companies must work with the City to apply to DEED to receive a MIF award. To receive a MIF loan, a business must, at minimum, meet the requirements outlined on mn.gov.
The size of an award depends on a variety of factors including (but not limited to) Minnesota’s competitiveness, local economic conditions, job creation and wage levels. All expenditures and hiring related to the MIF assistance may not occur until funding has been formally approved.
The Job Creation Fund (JCF) provides financial incentives to new and expanding businesses that meet certain job creation and capital investment targets.
Companies deemed eligible to participate may receive up to $1 million for creating or retaining high-paying jobs and for constructing or renovating facilities or making other property improvements. In some cases, companies may receive awards of up to $2 million.
To be designated as a Job Creation Fund business, a business must meet the minimum criteria outlined on mn.gov. Note: Projects that begin prior to becoming designated by DEED are not eligible for the JCF.
The DEED Redevelopment Grant Program helps communities with the costs of redeveloping blighted industrial, residential or commercial sites and putting land back into productive use. Grants pay up to half of the redevelopment costs for a qualifying site, with a 50% local match. The City of Lakeville and Dakota County are eligible applicants for the program.
Grants can assist with several things including building and site demolition, infrastructure improvements, soil stabilization, ponding or other environmental infrastructure and costs necessary for the adaptive reuse of buildings, such as asbestos abatement and lead paint mitigation. Note: grants do not provide assistance for building construction, renovation or rehabilitation.
The program distributes grant funding twice a year, with 50% being awarded to the seven-county Twin Cities metropolitan area, and 50% awarded to greater Minnesota. Applications are due by August 1 and February 1 each year. More information on redevelopment grants can be found at mn.gov.
The DEED Contamination Cleanup and Investigation Grants Program helps communities pay for assessing and cleaning up contaminated sites for private or public redevelopment.
Grants pay up to 75% of the costs to investigate and clean up polluted sites. Both publicly and privately owned sites with known or suspected soil or groundwater contamination qualify. The City of Lakeville and Dakota County are eligible applicants for the program.
Applications are due by May 1 and November 1 each year and require a 25% local match, participation in the Metropolitan Council's Local Housing Incentives Programs for Twin Cities Metro area applicants and the serious expectation that the site will be redeveloped. More information on redevelopment grants can be found at mn.gov.
Dakota County Incentives for Development
The Dakota County Community Development Agency (CDA) is a local government agency whose mission is to improve the lives of Dakota County residents and enhance the economic vitality of communities through housing and community development.
The Dakota County CDA administers a Redevelopment Incentive Grant (RIG) Program that has awarded, to date, over $13 million to 64 redevelopment projects and 27 planning activities. The City of Lakeville is an eligible applicant for the program.
The maximum grant award for plans is $15,000 and the maximum grant award for projects is $250,000. The RIG Policy and Procedures Guide (PDF) provides comprehensive information on the program’s purpose, eligibility criteria and requirements.