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City of Elk River, Minnesota <br />Morrell request for Tax Abatement <br />June 23, 2015 <br />Page 6 <br /> <br />of the annual abatement revenues to reduce the mortgage liability on the property and increase the projected return <br />on equity for the project. The analysis indicates the tax abatement assistance will have a positive impact on the <br />return. <br /> <br />Conclusion <br />The developer has requested assistance in the amount of $121,609 from the City of Elk River and that the project <br />would not be feasible without assistance as demonstrated by the return on equity comparisons. There are several <br />methods to determine if a project would proceed “but for” assistance. Based on the available information, in this case <br />a debt service and project cash flow gap analysis was utilized to test the viability of the project. The tables as <br />provided in the application indicate that the tax abatement assistance reduces the annual debt service burden on <br />project cash flows and improve the projected return on equity. “But for” abatement assistance, a reduction in <br />operating and/or borrowing costs, or increased revenues or some combination of the above, the developer has <br />indicated the project as proposed would not go forward. In addition, it is important to note that the developer has <br />indicated that the project will aid in the retainage of 105 jobs and creation of 8 new jobs in the City of Elk River. <br /> <br />Thank you for the opportunity to be of assistance to the City of Elk River. Please contact me at 651-223-3036 or <br />mhuot@springsted.com with any questions or to discuss.