5.1. SR 06-10-2002 - Laserfiche WebLink

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Public Heating - Tax Abatement Request by Elk Path, L.L.C. June 10, 2002 Page 2 of~ The applicant is requesting that the city abate its portion of the property taxes up to $200,000 on a pay-as-you-go arrangement. The Sherburne County Assessor's office has estimated the project market value of $3,346,200. The estimated annual city portion of the project's property taxes is $28,852. Accordingly, the $200,000 abatement would be provided over a term of up to 8 years (see attached TRF Projection Worksheet). In addition, the applicant has submitted an application to Sherburne County for property tax abatement up to $200,000. The total tax abatement request is $400,000. The proposed project meets several economic development goals of the City including: Job retention (John Oliver & Associates, Inc. - 40 full-time) and job creation, the applicant has projected to create up to 100 new full-time positions at a wage of $21/hour exclusive of benefits. Per the MN Business Subsidy Law, the applicant would be required to commit to meeting the job and wage goals within a two-year period from date of certificate of occupancy, or repay the pubhc assistance provided plus interest. Section 4 of the attached draft Abatement Agreement specifically defines the "Job Goals" for the project and payback provisions if the goals are not met. The new development will likely spur additional private investment in the West Business Park. The project will be the first to build under the city's revised Business Park design standards and will likely establish a quahty image for the West Business Park. · Increase the city's commercial/industrial tax base. The proposed project includes a geothermal heating and cooling system that is consistent with the city's "Energy City" goals. Section 2(a) of the draft Abatement Agreement covenants the project to contain the geothermal system. While the application meets the general requirements of the city's Tax Rebate Financing Policy, the following issues should be considered: The proposed development is 17% pre-leased by John Oliver & Associates, Inc. Is the office market demand sufficient to fill the remaining 83% without a significant negative cash flow? Perhaps a smaller scaled project would be more financially and market feasible without the use of tax abatement. The proposed development includes several amenities that add to the cost of the total project. Are the proposed amenities necessary to the project thereby making the project more affordable without the use of tax abatement? While the city's Tax Rebate Financing Policy allows for applications from office facilities that satisfy Business Park zoning requirements, does "speculative" off~ce space in Elk River need public financing assistance? Generally such a project would