8.0. EDSR 04-08-1996 - Laserfiche WebLink

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• increment financing assistance to support the proposed facility. Tax increment funds would be used to "write down" the cost of the land for this project. This District is proposed to be a "pay-as-you-go" district. In this manner, Marketech absorbs the cost of the site acquisition and newly generated taxes pay back the cost of this land acquisition. Accordingly, the EDA is not forced to borrow funds and the life of the District is shorter as no interest charges are incurred. Additionally, the expanding company absorbs the extra carrying costs and the city/EDA participates in the retention of an existing company as well as the attraction of new jobs. The District will be decertified as soon as the land acquisition costs and incidental administration costs to the District are recaptured. According to the application for TIF, Marketech would retain its existing 22 jobs and create 13 new jobs over the next three years. State law requires that any business which receives assistance, including TIF in excess of $25,000, must,create a net increase in jobs in Minnesota within two years of receiving the assistance. Job creation goals must be reported to the Department of Trade and Economic Development. If these goals are not met, the business must repay the financial assistance. The Marketech TIF assistance will fall within the provisions of the state law. This is an economic development TIF District. As such, there is-a penalty . placed on the local unit of government that creates the District. This penalty can either be a loss of local government aid or the city can opt out of the local government aid penalty by making a qualified local contribution to the District. The local government aid penalty equals approximately 35 percent of the increment while,the local opt out provision calls for 10 percent of the tax increment financing assistance to be contributed by the city to the District. It is recommended that the city selects the qualifying local contribution option as this has a smaller impact on city funds and that the city/EDA uses funds generated from the selling of the Industrial Park lot to the School District for financing this contribution. ,Questions regarding the TIF penalty should be directed to Lori.Johnson before the meeting as she will not be in attendance at the 4/8 EDA meeting. As required by law, the Plan has been distributed to the School District and County Board, and presentations to these groups were made. The notice of this TIF public hearing has been published in the Elk River Star News. The City Council public hearing on this District and proposal will follow the EDA meeting.