3.0. EDSR 03-06-2006 - Laserfiche WebLink

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Discuss Location Incentive fox Prospect March 6, 2006 Special EDA Meeting Page 2 of 3 1) In the past the city's use of public financial assistance has most typically been to expedite the development of industrial property in the city with the key component being job creation. Typically financial assistance requests axe reviewed based upon the number of jobs to be created at a minimum hourly wage of $15.00/hour and upon completion of a financial gap analysis ox "but-fox" test. A "but-fox" test is not required by state statute fox the city's use of tax abatement, although the City of Elk River's policy normally requires it. This particular request does not fit the city's tax abatement application model far the financial "but-fot" test although it appears that "but-fot" the offering of assistance this company would not select Elk Rivet as a location but rather a community that is offering a location incentive. 2) This particular request is different from requests in the past in that job creation is not a significant component to the project. However this project would result in significant tax base generation. Therefore this request should be considered as a "location incentive" fox the purpose of tax base generation and not based on a proven financial need nor on a large number of jobs. 3) When considering this particular project it is important to note that the market value hasn't been established. The company has estimated a market value upon completion of $20 million. Based on staffs research of a similar use in Brooklyn Paxk the value would range from $60-75 per square foot, which equates to a range of $10.8 to $13.5 million for the proposed 180,000 square foot project. The following table indicates the level of tax base generated fox the city depending on the final market value determination: Estimated Market Value $10.8 million $60/s $13.5 million ($75/sf) $20 million ($111/sp Total Annual Tax Payable Cit , Couo ~, S[am, School, e[c $385,000 $482,000 $714,000 Annual Ciry Portion $94,000 $118,000 $175,000 Annual County Portion $93,000 $117,000 $173,000 * Estimates based on 2006 Proposed Tax Rates 4) The attached table indicates recent assisted industrial development projects in which the city and county provided financial assistance. The table includes the percentage of financial assistance to the estimated market value as a result of the project. Based on past projects an average of 20% total assistance was provided to market value, although market value previously has not been a measurement fox the amount of assistance to be provided. Requested Action Staff requests the EDA's discussion and direction as to the willingness to provide a location incentive fox this particular project and if so, under what terms.