7.1. SR 09-03-2013 - Laserfiche WebLink

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must retain the jobs for a minimum of one year and they must pay wages greater than$12.19 per hour. Preferred Powder stated they intend to pay an average wage of$15 per hour. Financial Impact In accordance with the city's Tax Increment Finance Policy, Springsted Inc., completed a but for analysis and financial projection for the tax increment project. Springsted analyzed the sources and uses of funds for the applicant,and used input from the developer,banker, and city staff to form its opinion. They determined that the request for $1,153,878 is reasonable and that the project would not occur butfor the amount requested. A representative of Springsted will be at the meeting to address any questions. Staff can support the TIF application for a number of reasons,including: 1) Springsted's independent but for analysis supports the applicant's tax increment request. 2) Without support,the project will not go forward,based on statements of the applicant. 3) Upon construction,there will be a large,industrial building in the new development. 4) As the first such project, Preferred Powder should generate interest,momentum,and additional investment toward the eventual build out of the area. 5) Changes to the economy and banking rules have limited access to bank financing The developer and the banker financing the deal has expressed that the TIF is needed as up-front assistance. The city will use the land write down of$680,895 as up-front, and provide the remaining $472,983 through an interfund loan from the city's development fund. This will cover the site development costs and will be reimbursed upon actual costs incurred. The property tax dollars generated by the city, county, and school district from this property will be used to repay first the development fund,and then the land both with a 1.5%interest rate. Springsted stated that 24%interest is standard. At 1.5%interest, staff anticipates this project will take 9 years to pay back. The construction project will cost an estimated $6,192,695. Public financing will include: • TIF Financing $1,153,878 • FDA Microloan (equipment) $ 100,000 • FDA Forgivable Loan (construction) $ 200,000 Total public financing $1,453,878 (23% of project cost) Pending approvals, staff expects to close on the TIF, other city financing, and the land sale in early September. Preferred Powder plans to begin construction in September. Attachments • TIF Plan • Interfund Loan Resolution • Resolution Approving TIF • Forgivable Loan Documents • Wetland Credit Documents • TIF Agreement • Purchase Agreement • Development Agreement