04-10-2006 EDA MIN - Laserfiche WebLink

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Economic Development Authority Minutes Apri110, 2006 Page 3 actually creating arty "new" jobs, but rather would be relocating a significant number of existing jobs. President Gongoll stated that he felt jobs were being created in the City simply by them moving here, since there will always be some turnover. Some discussion of this issue followed. Ms. Mehelich noted that it would make it easier for staff to administer and evaluate the business subsidy reports based on total number of jobs. She noted that it is difficult to interpret where the new jobs need to come from within the Business Subsidy Policy. President Gongoll asked if all jobs aze looked at or just those within the wage level established in the Policy. Ms. Mehelich stated that wages are not averaged; only the jobs that pay $15.00 or more per hour aze counted. Mr. Scott noted that the under the current Tax Increment Financing Policy, $25,000 in financing is available per job, i.e., 10 jobs equals $250,000. President Gongoll stated that he would like to have more flexibility. Commissioner It~in?ing asked how the policies affect existing companies in the City that want to move or expand, since it is the City's goal to retain local jobs. Mr. Clark explained that some cities address the potential of job loss if a business was considering relocation to another community. Ms. Mehelich stated that State Statute allows cities to count retained jobs, if in fact a business can demonstrate that they tmly have an offer to go somewhere else. She stated that this language will be worked into the Cit}~s policy. Also, the City is allowed to set the job and wage goals at zero for any and as marry projects as they want. The only case where the City has done this is with the Orluck Industries project. She noted that the only requirement for deviation from the City's policy regarding jobs and wages is to hold a public hearing. Ms. Mehelich stated that the revised Policy will be brought back to the EDA next month. Discuss Draft Amendments to the City's Tax Increment Financing Policy Ms. Mehelich reviewed the history of the City's Tax Increment Financing Policy and Application. She noted that the policy was amended in 2000 to include the provisions of the MN Business Subsidy Law and the City's Business Subsidy Policy. Ms. Mehelich reviewed the proposed amendments as listed in the staff report to the EDA. Comaussioner Moon asked if the number of points was increased for the ranking. Ms. Mehelich stated that one other section was deleted with the same point number. Commissioner Moon noted that there are two Item #8's. President Gongoll stated he was uneasy about allowing a weighted score for either commercial or industrial because of a large dollar amount being spent on a building. He didn't want the perception that a client would need to spend a lot to get into Elk River. Ms. Mehelich cited examples of building cost for industrial at $50 - $60 a square foot in 2005 and $100/square foot for commercial projects ($ank of Elk River and MetroPlains projects). She noted that the data center was an industrial project and had a higher value of $60 - $90/square foot. Commissioner Tveite noted that there is a 7 point range to qualify for the high eligibility. Ms. Mehelich noted that most of the projects approved by the EDA have fallen into the moderate eligibility range. President Gongoll stated he had concerns about fees of $10,000. Ms. Mehelich stated that those fees are for Tax Increment Financing, not Tax Abatement. She explained that there are many more rules, regulations and processes involved in Tax Increment Financing, including public hearings. Ms. Mehelich stated that the fees are established to cover the