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City of Elk River, Minnesota <br />SPRINGSTED Page 6 <br />The proposed project consists of the redevelopment of property within the City that <br />consists of blighted properties that were found to be substandard and will be demolished <br />following establishment of the district. The City has identified significant and <br />extraordinary costs including public improvements, acquisition and demolition associated <br />with redevelopment of the project site in conjunction with new development. The <br />estimated total redevelopment costs for this property make the total cost of this effort <br />significantly higher than costs reasonably incurred for similar developments on a clean site. <br />The City’s finding that the proposed redevelopment would be unlikely to occur solely <br />through private investment within the reasonably foreseeable future is based on an analysis <br />of the proforma and other materials submitted by the developer. As necessary, the City <br />anticipates analyzing future developer’s proformas in detail to determine the minimal <br />amount of assistance needed to compensate developers for extraordinary and allowable <br />costs. <br /> <br />No higher market value expected: <br /> <br />If the proposed redevelopment did not go forward, for the same reasons described above, <br />no significant alternative redevelopment of the proposed TIF area would occur. The <br />existing buildings are currently substandard and it is highly unlikely that the improvements <br />would be made on the property site without tax increment financing. In short, there is no <br />basis for expectation that the area would redevelop or be renovated in any significant way <br />purely by private action without public subsidy. <br /> <br />To summarize the basis for the City’s findings regarding alternative market value, in <br />accordance with Minnesota Statutes, Section 469.175, Subd. 3(d), the City makes the <br />following determinations: <br /> <br />a. The City's estimate of the amount by which the market value of the site will <br />increase without the use of tax increment financing is anywhere from $0 to some <br />modest amount based on small scale renovation or redevelopment that could be <br />possible without assistance; any estimated values would be too speculative to <br />ascertain. <br /> <br />b. If the proposed development to be assisted with tax increment occurs in the <br />District, the total increase in market value would be approximately $2,829,727, <br />including the value of the building (See Exhibit V). <br /> <br />c. The present value of tax increments from the District for the maximum <br />duration of the district permitted by the TIF Plan is estimated to be $731,388 (See <br />Exhibit V). <br /> <br />d. Even if some development other than the proposed development were to <br />occur, the Council finds that no alternative would occur that would produce a market <br />value increase greater than $2,098,339 (the amount in clause b less the amount in <br />clause c) without tax increment assistance. <br /> <br /> (3) The TIF Plan will afford maximum opportunity, consistent with the sound needs <br />of the City as a whole, for development of the Project Area by private enterprise. <br /> <br />Factual basis: <br /> <br />The anticipated redevelopment of the project site and any subsequent demolition, <br />reconstruction, or renovation related to the project will remain consistent with the City’s <br />design goals.