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Housing & Redevelopment Authority Page 3 January 3, 2006 ---------------------------- of the HRA has any suggestions or recommendations for changes to the bylaws. There were none. 6. Consider Tax Rebate Financing for The Bank of Elk River Expansion Project Chair Wilson explained that he will be will be abstaining from any discussion or vote on this issue as he has very strong ties to The Bank of Elk River. Vice Chair Toth facilitated the HRA discussion. Director of Economic Development Catherine Mehelich explained that The Bank of Elk River submitted an application for Tax Rebate Financing ('7) assistance for the expansion of 20,000 square feet to their existing facility downtown. Ms. Mehelich indicated that The Bank of Elk River is requesting the city rebate up to $300,000 of its portion of the new property taxes generated from the project and the County rebate a matching share for a combined total of $600,000. Ms. Mehelich stated that normally, the city has provided tax abatement to manufacturing businesses but under the city's TRF Policy, Section V, Project Qualifications "commercial redevelopment or rehabilitation" proposals can be considered for the use of TRF. She stated that it is appropriate for the HRA to review and provide recommendation to the City Council on this request since the project involves significant redevelopment in the downtown area. Ms. Mehelich explained that normally a financial but for analysis would be completed to determine the amount of public assistance necessary for the project to proceed but this TRF application is being processed under the premise that The Bank is incurring substantial additional construction costs by converting the existing facility. She noted that this project meets all of the commercial redevelopment objectives found in Section III of the city's TRF Policy. Ms. Mehelich indicated that staff reviewed the complete application submitted by The Bank for Tax Rebate Financing to measure the strength of the project against the city's goals and objectives for the use of TRF. She stated that the project scored 44 out of 50 possible points which equates to a "highly desirable" project. Ms. Mehelich stated that the Sherburne County Assessor recently reviewed the building plans for the proposed expansion and has estimated the total project market value upon completion to be $4,539,600. The estimated increase in market value as a result of the expansion project is $2,932,900. Ms. Mehelich reviewed a breakdown between existing and new estimated market value as a result of the project. Ms. Mehelich reviewed job and wage goals. She stated that a requirement of the financing assistance to The Bank will include a commitment for the creation of 20 new full-time positions as a result of the expansion project at a minimum hourly wage of $15.00 within two years of project completion. Ms. Mehelich reviewed the three options for consideration as outlined in her staff report. She explained that staff is recommending the third option which would provide up to $300,000 of TRF based on only the new market value. She stated that this option would require the city to extend the term of the abatement to 12 years in order to reach the full amount of assistance, but would allow the city to retain the existing tax base. Ms. Mehelich noted that the term of the abatement could likely be less based on inflationary increases in market value in Sherburne County.