6.1. EDSR 09-21-2020 - Laserfiche WebLink

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The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To Joint Finance Committee Item Number 4.1 Agenda Section General Business Meeting Date September 16, 2020 Prepared by Amanda Othoudt, EDD Item Description Shoot Steel TIF Application and Financial Review Reviewed by Mikaela Huot, Baker Tilly Reviewed by Cal Portner, City Administrator Action Requested Review application and provide a recommendation to the Economic Development Authority to establish Tax Increment Financing District No. 26. Background/Discussion Shoot Steel is Shoot Steel, Inc. manufactures AR500 and AR550 steel targets, target stands, and other valuable range equipment. They are currently operating out of their Ramsey, MN facility. At their August 17, 2020, meeting, the EDA approved a purchase agreement from Shoot Steel contingent on the EDA holding a public hearing on September 21, 2020, and making the requisite findings required by Minnesota Statutes Section 469.105, subdivision 2 that the sale and conveyance of the property to the buyer are in the best interests of the city and the transaction furthers the EDA’s general plan of economic development. Shoot Steel also indicated their intentions to apply for incentives through the EDA. The purchase agreement proposes the purchase of a 4.34-acre lot at the asking price of $2.00 per square foot, or market rate, for a total of $378,100. Shoot Steel, Inc. is proposing to relocate 7 FT and 1 PT employees from their Ramsey location. They plan to hire 6-7FT employees over the next two years. The positions will pay a minimum of $18 per hour depending on skill level. Shoot Steel, Inc is requesting up to $400,000 in financial assistance from the city in the form of Tax Increment Financing to construct their new facility. The maximum term for an Economic Development district is 8 years after receipt of first increment, for a total of 9 years. The developer is proposing a pay-as- you-go method for eligible costs as reimbursement from the city to construct their new facility. This project is estimated to generate $269,050 in total gross tax increment over 9 years, the maximum term for an Economic Development District. The total net amount available for this project is $241,274 or 90 percent, with the city retaining 10 percent for administrative expenses over the term of the district. The present value of the increment generated considering a 4% interest rate is $192,196. There is a remaining financing gap of $210,000 in which the developer must fill from a combination of equity or other funding sources.