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In accordance with the city Tax Abatement Policy, Springsted,Inc. completed an independent but for <br /> analysis and financial projection for the tax abatement to conclude that with an estimated market value of <br /> $4,670,900, the project will generate sufficient tax abatement revenue to repay the city within an 18-year <br /> term at a 3%interest rate. It should be noted there is no minimum assessment agreement that establishes <br /> a minimum market value to guarantee repayment in the 18-year term. Also, the county will recommend <br /> the agreement for up to 12 years,which will generate enough money to pay back half of the land and <br /> development funds;however,the county will not pay interest on the project as initially requested. The <br /> interest is charged to replenish the development fund with a dollar amount equivalent to that used for <br /> abatement taking inflation into account. The county will already abate 12 years of taxes,which has been <br /> their maximum in most cases, and a 3%interest rate would push them beyond 12 years. <br /> Staff evaluated the company's application in accordance with the Tax Abatement and Business Subsidy <br /> Policy. The project scored 37 out of 45 possible points,which equates to a"moderately desirable"project <br /> based on the city's project priorities. <br /> The construction project, estimated at a cost of$6,192,695,will involve finance participation from the <br /> company's lender, equity participation, and the following public financing applications: <br /> City of Elk River Tax Abatement $ 576,939 <br /> Sherburne County Tax Abatement $ 576,939 <br /> EDA Micro Loan $ 100,000 <br /> EDA Forgivable Loan 200,000 <br /> Total $1,453,878 <br /> The city's Business Subsidy Policy requires the minimum wage for new or retained jobs at$15.00 per <br /> hour. Deviations are allowed to be considered for projects that result in a significant tax base increase. <br /> Preferred Powder intends to meet the city wage requirement. <br /> Attachments <br /> 1. Resolution Authorizing the Sale of Land <br /> 2. Resolution Authorizing Execution of Abatement Agreements <br /> 3. Resolution Authorizing the Reimbursement of Funds <br /> 4. DRAFT Tax Abatement Agreement <br /> 5. DRAFT Business Subsidy Agreement <br /> 6. DRAFT Purchase Agreement <br /> 7. Preliminary Building Plans <br />