6.0. EDSR 09-08-2003 - Laserfiche WebLink

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0 EHLERS • &. '\ ssacin —E , INC MEMORANDUM DATE: September 3,2003 TO: Catherine Mehelich,City of Elk River FROM: Sid Inman,Ehlers and Associates Inc RE: Industrial/Business Parks Land Development Strategy As you recall,the purpose of this analysis is to see if Elk River's industrial/business parks can be competitive with other markets and not create competition between the city's landowners. To complete this review it was determined by the EDA that we should first look at a first phase of development on three Elk River industrial/business parks: Elk Path Business Center,Elk River Business Park, and the EDA/Brown property. The analysis was to determine the total cost per square foot to develop the park and review it against what the market would be willing to pay per square foot. The difference in these two would be the gap the EDA would need to fill with TIF/abatement to be competitive. The first step in this analysis was to prepare an estimate of the total cost to develop each of the parks. This analysis includes the current special assessment costs,estimates of future public improvement costs, park dedication fees and an amount that would have to be paid for raw land to the landowner.This is added to arrive at a per square foot cost.We then estimated what an industrial user was willing to pay per • square foot for land to establish the market. We prepared projections on a Phase I for each park to determine if the amount of available subsidies was sufficient to fill the gap. We arrived at a square foot cost,that was the landowners' minimum sale price,of$1.25 per square foot (includes raw land,all improvements,and park dedication fees)based on general conversations we had with landowners. This number has to be reviewed with landowners,and an analysis would have to be completed to document if this is an accurate and justifiable number. We also have heard that the market for industrial land in Elk River is from$0 per square foot to $1.00 per square foot. We analyzed$0, $0.50,and$1.00 per square foot to be paid by the industrial user. Following are the other assumptions we used: 1. All financing would be pay as you go. 2. Special assessment estimates are from current rolls as of December 31,2003. 3. All public improvements are estimated from consultants. 4. Public Improvements may include City assessment bonds. 5. Park fees are at$2,000 an acre. 6. 90% of the TIF was available to the development. 7. That as soon as all costs were paid,the TIF would stop,and no additional TIF districts would be needed. 8. That each landowner would sign a master development agreement with the City as to the terms and conditions of the assistance,and it would apply to each lot assisted. 9. That the landowners sale price is $1.25 per square foot • 10. 11. That each landowner would provide a but-for analysis on the selling price of their land. Once we arrived at a market price,the developer,by contract,would be required to sell all of the lots at the determined price. 12. 40% lot coverage ratio on the build-out.