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Request for Action To Item Number Mayor and City Council 7.1 Agenda Section Meeting Date Prepared by Public Hearing October 5, 2020 Amanda Othoudt, ED Director Item Description Reviewed by Establish Tax Increment Financing District #26 Cal Portner, City Administrator and TIF Development Agreement Reviewed by Action Requested 1. Open Public Hearing to consider the TIF Plan and invite public comment. 2. Close the Public Hearing. 3. Adopt, by motion, a resolution approving a modification to the development program for Development District No. 1, establishing an economic development tax increment financing district, approving a tax increment financing plan and authorizing the execution of a tax increment development agreement. Background/Discussion Shoot Steel, Inc., has applied for Tax Increment Financing as a form of gap financing for this project. They manufacture AR500 and AR550 steel targets, target stands, and other valuable range equipment. They propose to relocate 7 FT and 1 PT employees and hire 6-7FT employees over the next two years. The positions will pay a minimum of $18 per hour depending on skill level. The applicant 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 $268,083 in gross tax increment over 9 years, the maximum term for an Economic Development District. The net amount available for this project is $241,274 or 90%, with the city retaining 10% for administrative expenses over the term of the district. The present value of the increment generated considering a 4% interest rate is $192,196. The authorized tax increment eligible costs include out-of-pocket administrative expenses up to $26,809; land acquisition and other public improvement costs up to $241,274. At their September 16, 2020, meeting, the Joint Finance Committee recommended approval of a 9-year TIF district for $190,000, plus 4% interest. On September 21, 2020, the EDA held a public hearing and approved a purchase agreement with Shoot Steel, Inc. for the property located at 17565 Tyler Street, NW. Following the public hearing, the EDA recommended the Council approve a TIF Plan to assist Shoot Steel for $190,000 plus interest at 4%. The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional,` 01 e service, and community engagement that encourages and inspires pi ospei l_ y INAWRE1