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Mayor, Council Members and City Manager August 20, 2007 Page 2 The City, as a municipal entity, has only those powers that are expressly conferred by statute, or impliedly necessary in order to exercise express powers. Consequently, the power to impose a PILOT agreement on an entity must exist somewhere in statute. Currently, there is no statute that expressly confers on Roseville the power to impose PILOT agreements on non-taxable entities. There are specific provisions in state law that do allow for PILOT payments, but apply only in very specific circumstances. See, e.g., Minn. Stat. Section 477A.12 (DNR payment to counties for wildlife refuge land); Minn. Stat. Section 97A.061, subd. 3 (DNR payment to counties for goose management cropland). In addition, there are varied statutes which require government entities themselves to remit payments as "payments in lieu of taxes" in certain situations. For example, municipalities are required to remit a certain portion of rental payments when they lease property to a taxable entity. MnDOT is required to remit a certain portion of rent received on excess real estate acquired for trunk highway purposes. The philosophy of PILOT agreements is similar to that of impact fees: that consumers of government services should make a contribution to their cost. However, for quite a number of years there have been efforts by municipalities and consortiums of municipalities to get such authority into statute, albeit unsuccessfully. The League of Minnesota Cities in its legislative platform has PILOT and impact fee initiatives as ongoing items from year to year. In short, we do not believe the City has the authority to unilaterally impose a PILOT agreement, in a vacuum, on anon-taxable entity; however, the analysis changes somewhat, and at least provides further arguments, where the PILOT agreement is part of a land use approval process. Under Minnesota law, a municipality has the authority to impose conditions on land use approval, for example conditional uses, where the condition has a nexus to the use and the "harm" that might arise from such use. In the context of Northwestern College, the City Zoning Ordinance provides that the land use approvals would take the form of a Planned Unit Development Agreement. A PUD is a vehicle, generally, by which the parties to the agreement negotiate on the terms and conditions of a given land use. Here, the College is seeking approval of a Master Plan for the build-out of the campus over, we understand, the next 20 years. The Plan will provide for the construction of new buildings, and the renovation of existing buildings, all of which will, in theory, increase enrollment, and create a greater demand for City services. Under the above circumstances, we believe that the concept of a PILOT agreement is at least colorable enough to present it to the College as something, prior to land use approvals,