7.5. SR 07-20-2015 - Laserfiche WebLink

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City of Elk River, Minnesota Morrell request for Tax Abatement June 23, 2015 Page 3 Tax Abatement Revenue Estimates Morrell Abatement Project City Abatement Estimated Annual Tax Abatement Revenue $8,107 Total Estimated Tax Abatement Revenues (15 Years) $121,609 Estimated Present Value of Total Revenues $86,674 The above table illustrates the projected net revenues that tax abatement would generate for the proposed term of 15 years for the City. The company has also requested tax abatement assistance from the County for a term of 10 years. The estimated total abatement revenues as requested from the County are equal to $89,300. The maximum abatement term for the City is up to 20 years if only 1 or 2 entities participate in the abatement or the City receives written denial of participation from one of the other taxing entities (County or School District). All participation levels and amounts would be subject to individual policy and Board decisions following anticipated public hearings. Revenues captured through tax abatement and provided as reimbursement to the property owner for certain costs must be used only for those properties that benefit from the tax abatement. Developer Request for Tax Abatement Assistance The developer submitted a request for tax abatement assistance from the City of Elk River and Sherburne County to assist with financing the proposed $2.380 million acquisition and subsequent construction of an expansion on current City-owned property located in the 2nd phase of the Nature’s Edge Business Center. The developer has requested approximately $121,609 in abatement assistance over 15 years from the City and $89,300 over 10 years from the County. The Developer’s submittal includes a preliminary total project budget of $2,380,545 as shown in the table below. Project Costs Total Cost Sources of Funds Total Sources Land Acquisition $349,351 Bank Loan $1,680,545 Site Development/Construction $1,824,769 Equity $500,000 Machinery & Equipment $80,600 EDA microloan $200,000 Professional Fees & Other $35,825 Total Costs $2,380,545 Total Sources $2,380,545 Project Financing There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as- you-go basis. With upfront financing, the City would finance a portion of the Developer’s initial project costs through the issuance of bonds or as an internal loan. Future revenues would be collected by the City and used to pay debt