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TIF District No. 13 Page 3 <br /> September 11; 1995 <br /> increment from each of the years, the following estimate of the <br /> • "qualifying local contribution" is offered: <br /> $2,727 (in 1998) plus $2,724 (in 1999) plus $2,720 (in 2000) plus <br /> $2,717 (in 2001) plus$2,714 (in 2002) plus $2,710 (in 2003) <br /> equals a qualifying local contribution of$16,312. <br /> TL Feeding System's tax increment grant would be reduced by <br /> $16,312 over the life of District No. 13. <br /> The Land Value Dilemma <br /> Under a pay-as-you-go TIF grant, the company/developer incurs the <br /> cost of the land acquisition and site development/site preparation <br /> costs. As the project begins generating property taxes, the <br /> company/developer is reimbursed for the up front costs over a period of <br /> years. During the initial discussions with TL Feeding Systems, it was <br /> suggested that the company program in $1.00 per square foot for a 3 <br /> acre site. This brings the acquisition price to nearly $135,000. <br /> Country Ridge Partnership recently sold all of its Business Park <br /> holdings to DMV Mall Corporation. According to a Certificate of Real <br /> • Estate Value, DMV paid in excess of$782,000 for approximately 37.5 <br /> acres of land. DMV has listed its property with a real estate broker. <br /> The quoted price of the Business Park property (for industrial users)is <br /> $1.85 per square foot. <br /> The writer of this memo has reason to believe that this price is not <br /> reflective of the Elk River market value for industrial properties. This <br /> is further supported by an EDA-authorized appraisal analysis that <br /> was accepted by the EDA in June of 1994. Utilizing a matrix of <br /> factors, the appraisal concluded that business park property in Elk <br /> River should command, on the average, .90G per square foot. Sites <br /> along a frontage road would no doubt command a higher price than <br /> internal sites. However, a great disparity exists between the quoted <br /> price from the real estate broker and the EDA's expectations. <br /> Since the EDA is not asked to acquire the property on behalf of TL <br /> Feeding Systems, the EDA would expect TL Feeding Systems to <br /> negotiate a price that is reflective of reasonable market values. Should <br /> this not occur, the EDA simply does not have a TIF project. In <br /> addition, as the acquisition price changes, the TIF budget and cash <br /> flow analysis changes, too. <br /> ID <br />