6.0. EDSR 03-11-2002 - Laserfiche WebLink

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TRF Application J.L.T.Partnership,L.L.P.&John C.Weicht&Associates,L.L.P. May 13,2002 • Page 2 of 2 The total cost of the project is projected to be$4,720,000. Sources of financing include a $3,456,000 loan from First National Bank of Elk River and a$864,000 equity contribution by the partners. The applicant is requesting that the city rebate its portion of the property taxes up to $200,000 on a pay-as-you-go arrangement. The Sherburne County Assessor's office has estimated the project market value of$3,346,200. The annual City portion of the project's property taxes is estimated to be $28,852. Accordingly, the $200,000 rebate would be provided over a term of 6-7 years (see attached TRF Projection Worksheet). In addition, the applicant has submitted an application to Sherburne County for TRF up to $200,000. The total tax rebate request is $400,000. Upon receipt of the applicant's tax rebate financing application, staff completed the ratings worksheet used to help analyze such proposals. The proposed project scored a"49",which equates to a "High" eligibility rating. The project meets several economic development goals of the City including: *Job retention (John Oliver&Associates, Inc.) and job creation- the applicant has projected to create up to 100 new full-time positions at a wage of$21/hour exclusive of benefits. Per the MN Business Subsidy Law, the applicant would be required to commit to the job and wage goals defined within a two-year period or repay the public assistance provided. • *The new development will likely spur additional private investment in the West Business Park. * Increase the City's tax base. Action Requested While the application meets the general requirements of the City's Tax Rebate Financing Policy, the following issues should be considered: *The proposed development is 17%pre-leased by John Oliver&Associates, Inc. Is the office market demand sufficient to fill the remaining 83%without a significant negative cashflow? Perhaps a smaller scaled project would be more financially and market feasible without the use of tax rebate financing. * The proposed development includes several amenities which add to the cost of the total project. Are the proposed amenities necessary to the project thereby making the project more affordable without the use of TRF? * Does office space in Elk River need public financing assistance? Generally such a project would be driven by market demand. Additionally,what impact and precedence will the use of TRF for speculative office space have on future office developments in Elk River, such as 4110 on Highway 169? If the EDA approves the project,its recommendation will be sent to the City Council for consideration and a public hearing.