7.1. SR 10-20-2014 - Laserfiche WebLink

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Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul,MN 55101-2887 Springsted Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com MEMORANDUM TO: Jeremy Barnhart, Community Operations and Development-Deputy Director FROM: Mikaela Huot,Vice President/Consultant Julian Bradshaw,Analyst CC: Dan Weber, Economic Development Specialist, Sherburne County DATE: October 10, 2014 SUBJECT: Estimated Financing Projections for Proposed Tax Abatement: Stonesthrow The City of Elk River has requested that Springsted provide preliminary tax abatement revenue projections for the commercial property located at 17834 Industrial Circle NW, for which a tax abatement project would be created to capture taxes generated from the existing building through an annual abatement levy. The applicant, Stonesthrow Properties LLC, currently occupies a portion of the building through a temporary lease and is considering acquisition of the building through a contract for deed and relocating permanently at the site. Stonesthrow Properties LLC would receive a pay-as-you-go note in which the City and County (subject to policy and approvals) would reimburse the business for certain costs associated with acquisition of the property and any subsequent improvements. Additional assumptions and terms of the proposed abatement are outlined further below. Tax Abatement The statutory language defining tax abatement is contained in MN Statutes 469.1812 to 469.1815. Section 469 refers to the capture or deferral of property taxes due as"tax abatement." Under Minnesota law, taxes due on real property subject to tax abatement must still be paid as due. If tax abatement is in place, the appropriate portion of the taxes can be captured for development purposes. Just what the appropriate portion is depends on which governmental entities hold public hearings and adopt abatement resolutions. A participating city, county, or school district is required to act separately to determine the use of its share of property taxes. Unlike tax increment, tax abatement can be used to capture taxes on land and existing buildings as well as new improvements. Tax abatement also does not statutorily require a `but for' analysis; however the City's current policy requires this analysis be done. The captured taxes are used to offset the costs agreed to under an abatement agreement. A city may grant a tax abatement, by contract or otherwise, of the taxes imposed by the city on a parcel of property, which may include personal property and machinery, or defer the payments of the taxes and abate the interest and penalty that otherwise would apply, if: