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