5.1 EDSR 10-20-2014 - Laserfiche WebLink

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City of Elk River,Minnesota Stonesthrow Properties, LLC.request for Tax Abatement October 10,2014 Page 6 o provide or help acquire or construct public facilities; o help redevelop or renew blighted areas; o help provide access to services for residents of the political subdivision; o finance or provide public infrastructure; o phase-in a property tax increase on the parcel resulting from an increase of 50 percent or more in one year on the estimated market value of the parcel, other than increase attributable to improvement of the parcel;or o stabilize the tax base through equalization of property tax revenues for a specified period of time with respect to a taxpayer whose real and personal property is subject to valuation under Minnesota Rules,chapter 8100. It is also important to note that the developer has indicated that should the property be acquired and subsequently leased to Coin-Tainer Co., LLC, the project would create a minimum of 10 new full time positions and retain 26 positions in the city of Elk River. In addition upon acquisition of the property (by Stonesthrow Properties, LLC), the developer will implement improvements that are projected to increase the value of the property. The developer has indicated that without abatement revenues that acquisition and subsequent improvement of the property will not be possible due to the inability to produce viable cash flows and maintain a reasonable debt service coverage ratio.The implication being that"but for"abatement assistance the project will not proceed. Conclusion The developer has requested assistance in the amount of$359,580, or the maximum available pursuant to the City of Elk River and Sherburne County's tax abatement policy. The developer has indicated that acquisition of the property would be prohibitively expensive and not feasible without assistance as demonstrated by a debt service coverage ratio that is below market and projected negative annual cash flow. There are several methods to determine if a project would proceed "but for" assistance. Based on the available information, in this case a debt service and project cash flow gap analysis was utilized to test the viability of the project. The tables in the above paragraphs indicate that a gap in project cash flows exist and that "but for" abatement assistance, a reduction in operating and/or borrowing costs, or increased revenues (through increased lease rates to tenants or financial assistance) or some combination of the above, the project would not go forward. In addition, it is important to note that the developer has indicated that the project will aid in the retention of 26 full time jobs and the additional creation of a minimum of 10 new full time jobs (through the retention of Coin-Tainer Co., LLC as a lessee) in the City of Elk River. Thank you for the opportunity to be of assistance to the City of Elk River. Please contact us at 651-223-3000 or mhuot a(�springsted corn and jbradshaw a(�springsted.com with any questions or to discuss.