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City of Elk River, Minnesota <br />SBH Properties, LLC Tax Abatement Project <br />September 23, 2016 <br />Page 2 <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 />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 />• City of Elk River proposed tax abatement <br />• City participation for 12 year <br />• County participation for 10 years <br />■ Subject to policy, review and approvals <br />• Abate incremental new value <br />• PID:75- 811 -0125 <br />• EMV as of Jan. 2, 2016 for taxes payable 2017 is $51,800 <br />• Existing land value <br />• Assumed to be `base' value of abatement <br />• Estimated new value after construction is $832,000 <br />• Value estimate provided by County Assessor <br />• Taxes estimated in application for assistance <br />• Incremental value of $780,200 would be abated <br />• Full value for payable 2019 (100% total value) <br />• Abatement term and participation <br />• Request for City assistance for 12 years <br />• Request for County assistance for 10 years <br />• Anticipated First Year of Abatement <br />• Taxes payable 2019 (based on full estimated value) <br />• Construction commences in 2017 and complete by December 31, 2017 <br />• 2016 tax rates remain constant through term (Rates Provided by Sherburne County) <br />• City : 46.170% <br />• County: 50.478% <br />• School: 39.268% <br />• Other: 4.778% <br />• 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 />