Laserfiche WebLink
ITEM 6. <br /> <br />r":W of <br /> <br />MEMORANDUM <br /> <br />River <br />  /~ROM: <br /> DATE: <br /> <br />SUBJECT: <br /> <br />Mayor & City Council <br /> <br />Paul T. Steinman, Director of Economic <br />Development <br /> <br />February 2, 1998 <br /> <br />Development Account Guidelines <br /> <br />As the Council is aware, a Development Account has been formed to facilitate <br />the working capital needs of economic development. The purpose of this <br />issue before the Council is to discuss the draft Development Account <br />Guidelines which discuss the purpose sources of capitalization and ehgible <br />uses of funds in the Development Account. <br /> <br />A Development Account is a significant financing source for economic <br />development projects. Economic development is an expensive process and <br />requires a significant amount of "working capital" to facilitate various <br />projects and programs undertaken by the department. One primary example <br />of the department's need for a substantial funding source is with regard to <br />the potential Gagne/Christian development project in West Business Park. If <br />the project proceeds as planned, they will be requesting up-front tax <br />increment. If up-front assistance is approved, the amount of dollars required <br />is $800,000 to $900,000. These are dollars which would be recouped by the <br />city over a 9-11 year period through generation of tax increments on the <br />property. <br /> <br />Another example is if we proceed to purchase industrial property out east, we <br />may have to wait some time before we can recoup our investment through <br />generation of tax increments from development. By these examples, it is easy <br />to see that even as much as $1.5 million in a Development Account would not <br />be a substantial pool of funds. Dollars in the Development Account do not <br />have to be considered, as "grant money". It is every intention of economic <br />development staff, whenever possible, to recoup - any Development Account <br />dollars spent. The Development Account Guidehnes as attached indicate <br />that such actions will be taken as are necessary to sustain and maintain the <br />balance in the Development Account. <br /> <br />The proposed Development Account Guidehnes will be helpful in assuring <br />that Development Account dollars are only used in a manner which is seen to <br />provide a significant economic development return measured primarily in tax <br /> <br />13065 Orono Parkway · P.O. Box 490 · Elk Riven MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425 <br /> <br /> <br />