7.4. EDSR 12-21-2020 - Laserfiche WebLink

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SUMMARY OF RESEARCH AND RECOMMENDED STRATEGIES EDA STRATEGIC PLAN 17 6. INCENTIVES FOR BUSINESS ATTRACTION/RETENTION For better or worse, public financial incentives that are offered to new industrial developments are a factor in their locational decisions. Having said that, incentives are usually not the overriding factor for a locational decision, because the fundamental strengths and weaknesses of a location have a greater impact on the long-run success of a business. Elk River has utilized a broad set of incentives to attract new business development, but for new development on previously undeveloped land, tax abatement has been the most important source of financial support—as is true for many similar cities. When Elk River provides tax abatement for new facility development, it benefits from the practice of Sherburne County to match its abatement with a comparable abatement of county property taxes. That essentially doubles the impact of Elk River tax abatement decisions. The level of incentive provided to a development is subject to negotiation between the City and the developer. Some cities establish clear policies relative to the level of tax abatement they will provide, which simplifies communication and reduces the time involved in negotiation. Chaska is an example of that, as we learned in our peer city interview with Assistant City Administrator Nate Kabat. The City offers new businesses/expansion tax abatement for a total of three times the annual total of new property taxes generated. The City of Elk River could also establish policies that provide for a certain level of tax abatement for target industries and a different set for other industrial development. We see a benefit to Elk River in establishing a policy that sets an attractive yet reasonable level of tax abatement support that is available, and in so doing reduces the negotiation that is required for determining the level of incentives for any given business applicant. The Business Microloan program has a number of subprograms, some of which have been seldom utilized. A review of little used programs could result in allowing some to expire. In other cases the subprogram may require additional resources to be useful to its intended recipients. Strategies/Actions 6a. Establish a tax abatement policy that sets a standard for the amount of tax abatement the City will provide for business attraction. 6b. Reevaluate the subprograms encompassed under the Business Microloan program, and determine whether underutilized programs should be eliminated or retooled. 6c. Increase marketing for the newly adopted Energy Incentive Program to increase its visibility and utilization.