6.2 EDSR 12-16-2013 - Laserfiche WebLink

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• caYof Re uest for Action El q River To Item Number EDA Finance Committee 2.2 Agenda Section Meeting Date Prepared by General Business November 5,2013 Brian Beeman,Director of Economic Development Item Description Reviewed by Bank of Elk River Business Subsidy Agreement Tax Jeremy Barnhart,Deputy Director,CODD Abatement Default Reviewed by Action Requested 1) Recommend that the EDA amend the Business Subsidy Agreement. 2) Consider terms for Bank of Elk River's repayment of Tax Abatement to the city for the portion of unmet wage and job goals as per the Business Subsidy Agreement and make recommendation to the EDA. Background/Discussion In 2006 The Bank of Elk River was provided a tax abatement for renovation of its existing facility and the construction of an approximately 20,000 square foot expansion.As part of the tax abatement and • Business Subsidy Agreement between the City and The Bank of Elk River,certain job goals were outlined which, falls under the Business Subsidy Law,Minnesota Statutes,Section 116J.993 through 1161995. In cooperation from the State DEED office,EDD staff,and their attorney,it has been determined that The Bank of Elk River has not met its wage and job goals as specified in the Business Subsidy agreement since it was signed April 17,2006.The EDA allowed two extensions due to extenuating circumstances caused by a weak economy and reorganization.The last extension expired September 2013. However,since the City Council passed the second extension in November 2011 instead of in September,the State allowed the City to use November 2013 as the deadline for the second extension.The bank provided their most current wage,job,and job retention goals on November 1,2013. . At the time the agreement was signed,the bank had 63 employees and the wage and job goals required that the bank create 20 additional full time employees at$15.00 per hour within two years of the signing of the agreement as per the State DEED's comments and as specified in the Business Subsidy Agreement.This means that a total of 83 jobs must be retained.Currently,the bank has created 14 of the 20 jobs which are tied to the Tax Abatement project,for a total of 61 jobs retained since 2006. EDA staff has contacted the State to determine the next course of action.The State is of the understanding that no further extensions are allowed,and it is questionable whether the Tax Abatement and Business Subsidy Agreement can be amended. The EDA attorney has determined that there are only two options: III r . s ( REs i INARJRE