7.0. EDSR 02-09-1998 - Laserfiche WebLink

Home Browse Search

FEB-04-98 04 :03 PM PELSTRING01 5509221 P. 03 • After our initial assessment, we are havinggreat difficulty in establishing the financial viability of the project, given the extraordinary costs associated with the project's infrastructure and site development. In our recent discussions, it has also become clear that the City would encourage the development of additional industrial and/or office showroom space in the City of Elk River. For this reason, we are exploring the opportunity to acquire the 40 acres immediately south of the site, which could serve as office/showroom development as a part of the overall development. TAX INCREMENT FINANCING DISTRICT Our analysis of estimated development cost suggests that the project does not provide the potential investment returns to justify the development costs to complete the project. For this reason we would request consideration of the site as a "redevelopment" tax increment financing district. Our analysis suggests that the site would qualify as a redevelopment tax increment district, with a statutory term of twenty-five years. The preliminary analysis of the redevelopment district was forwarded to you under separate cover. TiF FINANCING REQUEST ISSUES We have identified a prospect of initiating the acquisition and site development costs at an estimated overall development cost of $12,604,700. After adjustments for wetlands and road rights-of-way, we anticipate the ability to develop approximately 40 acres of the site. As a result, our developed cost per square foot totals an estimated $6,58. This exceeds the prospective average sale price and site development reimbursement of $6.44/sf, based upon the prospective sales in the attachments. As a result, we have determined that the developer would require assistance totaling $2,863,000 to justify implementation of the project. This amount represents a small percentage of the prospective increment as the city could retire this obligation on a pay-as- you-go basis within 9 years, utilizing 75% of the increment. In addition to the developer's assistance, we would work directly with the EDA to facilitate the acquisition and development of the adjacent 40 acre industrial parcel. Also, as you are aware, Amcon Construction has expressed a direct Interest in working with Associated Developers and the EDA to begin development of the industrial site. • Within the attachments, the financial analysis of the district suggests that, in addition to the developer's assistance, the City/EDA could issue bonds with net proceeds of $750,000 for