6.3 EDSR 10-17-2016 - Laserfiche WebLink

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Request for Action To Item Number Economic Development Authority Finance Committee 4.2 Agenda Section Meeting Date Prepared by General Business February 23, 2016 Amanda Othoudt, EDD Item Description Reviewed by Apex Embroidery & Design, Inc. Property Tax Cal Portner, City Administrator Reviewed by Abatement review Action Requested Consider and recommend the EDA deny property tax abatement for SBH Properties, LLC. Background /Discussion SBH Properties, LLC dba /Apex Embroidery & Design requested 12 -year pay -as- you -go property tax abatement from the city in the amount of $85,164. The proposed $1.75 million project consists of constructing a 13,312 sq. ft. facility on approximately 1.4 acres of land at 9775 1581h Circle NW. They will have the option to purchase and adjacent parcel for room to expand their proposed facility an additional 14,975 sq. ft. The estimated taxable value of the existing land as of January 2, 2015, for taxes payable in 2016 is $47,500 generating $642 in property taxes. The estimated market value after construction is $832,000 as provided by the county assessor. The incremental value of $780,200 would be abated resulting in $7,097 per year, or $85,164 over 12 years being reimbursed back to the developer. The applicant has also submitted an application for tax abatement assistance from the county totaling $77,592 over 10 years. The total estimated combined abatement revenues from both the city and the county total $162,756 which equates to approximately 9.3% of the total project costs. The applicant has also requested a $200,000 forgivable loan from the city. The combination of public funding consisting of tax abatement dollars and forgivable loan money equates to 20.7% of the total project costs. Tax Abatement The attached memo from Springsted summarizes the analysis completed to date. The project scored 35 out of 45 total possible points, indicating a moderate project desirability rating. The property tax abatement policy indicates that the developer shall demonstrate that the project is not financially feasible but-for the use of Tax Abatement. The policy indicates the city will consider the use of Tax Abatement assistance for projects that may not meet the but-for and job creation criteria, but rather would be considered a location incentive. These projects may result in other public benefits such as significant tax base increase, the creation of higher paying jobs (at least twice the minimum hourly rate stated in the City's Business Subsidy Policy), and is likely to assist in the marketing and attraction of additional desired developments. NAfURFj