4.5. SR 01-21-2014 - Laserfiche WebLink

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City of Elk Request for Action River To Item Number Economic Development Authori 6.2 Agenda Section Meeting Date Prepared by General Business December 16, 2013 Jeremy Barnhart,Deputy Director, CODD and Brian Beeman,Director of Economic Development Item Description Reviewed by Bank of Elk River Business Subsidy Agreement Tax Abatement Default Reviewed by Action Requested A motion to approve the EDA Finance Committee's recommendation of Option 2 set forth below as the next step to be taken by the City under its Tax Abatement and Business Subsidy Agreement with the Bank of Elk River in light of the Bank's failure to meet required wage and job goals. Background/Discussion The EDA's Finance Committee met on Tuesday,December 10 to review the Bank of Elk River's information regarding their satisfaction of the job and wage goals set forth in its 2006 Tax Abatement and Business Subsidy Agreement with the City. The Agreement provided for reimbursement of up to $300,000 of the Bank's project costs associated with the construction of the downtown bank through tax abatements over a 12 year period. The Agreement required the Bank to create 20 jobs above the 63 existing downtown jobs at a wage of 15$ per hour or higher within a 2 year period from the date of the subsidy. This time-period has been extended through November of 2013 and no further extensions are allowed by law. The Finance Committee has determined that the maximum number of new jobs added at the Downtown branch was 13 full time jobs,in December,2010. Thus, the Bank did not meet the job goals required under the Agreement,which constitutes a default of the Agreement. When a default exists, the Agreement authorizes the City to terminate the Agreement and future tax abatement to be paid. In addition, the Agreement requires reimbursement of all subsidy received on a pro-rated basis based on the pro-rated portion of the job goal met. Since the Bank met 65% of the job and wage goals,it would be required to repay 35% of the subsidy received to date. To date,the Bank has received approximately 42% of the maximum tax abatement amount authorized under the Agreement. The EDA can enforce the Agreement as noted above or it can amend the Agreement to better clarify the intent of the City concerning default and remedies. Staff has identified the following options: Option 1. Determine that the Bank failed to meet the job and wage goals and that a default in the Agreement exists, terminate the Agreement, discontinue future tax abatement and require return by the Bank of 35% of all tax abatement payments paid. P O w E A E D A Y UREJ