8.0. EDSR 03-11-1996 - Laserfiche WebLink

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EDA TIF Request Page 2 March 11, 1996 • land acquisition and the site development components of the project. With each manufacturing project, an economic development (ED) district is established. The ED districts are designed to last only a few years as each one of these new districts results in either a loss of state aid or a local contribution to the project. This local contribution option is new (1995 law) and one that the city favors because it carries a lower overall cost to the city. The local option is 10 percent of the annual tax increment and our source of funds would be the EDA revenues that have been generated from the sale of the Industrial Park lot to the School District. With this Marketech project, the local contribution will be approximately $1,000 per year for the five year life of the district. More detailed information on the finances of this project and the local contribution should be available Monday evening. Due to the fact that a local financial loss is part of all new TIF Districts, it was the EDA and City Council consensus that they would evaluate new projects on a case-by-case basis. Based on future job growth with Marketech, the desire to have Marketech locate in the McChesney Industrial Park, the fact that Marketech is not asking for a micro loan, and, the fact that city staff believes that this is the right location for this local business expansion, it is recommended that this request should be supported by the City Council and EDA. On 3/7/96, the Assistant City Administrator Lori Johnson and I met with Rich Duggan and Tom McNair from First National Bank to review this project. Items discussed included an overview of the project, the city's strong desire to do a pay-as-you-go project, and the city's support for business retention and expansion. Additionally, I had a conversation with the county commercial appraiser for Elk River on 3/7/96 to discuss this project. This telephone conversation was important because the final market value drives the maximum TIF amount available. Our current TIF policy calls for a maximum TIF subsidy of 15 percent of the project's finished value. In discussing all of the pros and cons of this project and the city's support for this project, staff is recommending that the city offer 17 percent of the finished project as the maximum TIF contribution. Regardless if the contribution is 15 percent or 17 percent, the TIF increments will still be collected for five years. The 15 to 17 percent increase is about an extra $1,000 a year in available increment. The extra 2 percent maximum TIF subsidy was discussed in order to encourage and support: this expansion into McChesney Industrial Park, the pay-as-you-go approach, and the city's strong commitment for business retention and growth. This 17 percent request will need EDA and City Council approval.