2. EDSR AGENDA 06-24-2013 - Laserfiche WebLink

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Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Tel: 651- 223 -3000 Fax: 651 - 223 -3002 www.springsted.com TO: Members of the EDA and City Council Brian Beeman, Economic Development Director Clay Wilfhart, Assistant Director of Economic Development FROM: Mikaela Huot, Vice President Julian Bradshaw, Analyst CC: Terri Heaton, Senior Vice President Tony Schertler, Senior Vice President DATE: June 20, 2013 SUBJECT: Preferred Powder Coating — Project Analysis The City of Elk River has asked Springsted to evaluate a tax abatement request for assistance from the City and Sherburne County submitted by the developer, Preferred Powder Coating, LLC, for the construction of an approximate 100,000 square foot facility. The purpose of the analysis is to estimate the tax abatement revenues for the project and to determine whether the development is likely to proceed "but for" the requested Tax Abatement assistance. We have reviewed the project assumptions and general rationale for assistance submitted by the developer. It is our understanding that the developer is in the process of assembling financing for the project, and has received preliminary financing commitments from its lender. A letter as provided by the lender has indicated that there is a limit to the amount of debt that could be supported by the project and that financial assistance is necessary to finance a portion of the extraordinary project costs, including site preparation and acquisition. Assistance would be necessary to provide an additional upfront funding source for a portion of the project costs and to provide sufficient cash flow to meet the annual debt service coverage requirements in the operating proforma. Based on this information, the City could be justified in making a "but for" finding that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. We recommend, however, that the City also consider an appropriate level of assistance for reimbursement of certain eligible project costs based on the developer's information. Public Sector Advisors