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City of Elk River, Minnesota <br />SBH Properties, LLC Tax Abatement Project <br />September 23, 2016 <br />Page 2 <br /> <br />important to analyze what other options may be available to close any financing gap that may not require public <br />assistance. It is important to note that tax abatement does not statutorily require a “but for” analysis to determine if <br />the project would proceed without assistance, however it must be determined that the project is in the public interest <br />and that the benefits outweigh the costs. The City’s current tax abatement policy requires this finding be made. It <br />should also be noted that the City’s approach to the use of tax abatement is to finance the extraordinary costs <br />associated with a new development or project. <br /> <br />Tax Abatement Assumptions <br />Springsted made certain assumptions to calculate the estimated amount of tax abatement revenue generated by the <br />proposed new project. Those assumptions include the following: <br /> <br /> City of Elk River proposed tax abatement <br />o City participation for 12 year <br />o County participation for 10 years <br /> Subject to policy, review and approvals <br /> Abate incremental new value <br />o PID: 75-811-0125 <br />o EMV as of Jan. 2, 2016 for taxes payable 2017 is $51,800 <br />o Existing land value <br />o Assumed to be ‘base’ value of abatement <br /> Estimated new value after construction is $832,000 <br />o Value estimate provided by County Assessor <br />o Taxes estimated in application for assistance <br />o Incremental value of $780,200 would be abated <br />o Full value for payable 2019 (100% total value) <br /> Abatement term and participation <br />o Request for City assistance for 12 years <br />o Request for County assistance for 10 years <br /> Anticipated First Year of Abatement <br />o Taxes payable 2019 (based on full estimated value) <br />o Construction commences in 2017 and complete by December 31, 2017 <br /> 2016 tax rates remain constant through term (Rates Provided by Sherburne County) <br />o City : 46.170% <br />o County: 50.478% <br />o School: 39.268% <br />o Other: 4.778% <br />o Total 140.694% <br /> Class rates remain constant through term <br />o 1.5% first $150,000 market value and 2% value above $150,000 <br /> 0% annual market value inflator assumed <br />