7.2. EDSR 02-16-2021 - Laserfiche WebLink

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Applicant Request for Assistance The applicant’s application for financial assistance includes an approximate $8.38 million project that would be funded by Meritex (the owner) through private funds and owner cash equity. The applicant has requested $769,875 in tax abatement assistance from both the City and County to provide annual cash flow assistance following the expansion construction for up to 15 years. The City’s share of tax abatement as requested over 15 years is approximately $388,800 and would constitute as a business subsidy due to the proposed amount. The process for considering a business subsidy includes holding of a public hearing, similar to the tax abatement process. The maximum amount available based on 14 years of the remaining eligible term of the abatement is estimated to be $362,880, as further described within the memo. The sources and uses of funds for the business expansion as outlined in the application for tax abatement assistance is illustrated in the table below. Sources Amount Uses Amount First Mortgage $0 Acquisition $0 Other Private Funds (Meritex - owner) $5,963,775 Site Development $353,000 Owner Cash Equity $2,425,000 Construction $5,503,775 Machinery & Equipment $2,425,000 Legal/Professional Fees $107,000 Contingencies $100,000 Total $8,388,775 Total $8,388,775 Qualifications Pursuant to the Section V of the City’s tax abatement policy, all tax abatement projects considered by the City must meet each of the following qualifications: a. The project shall meet one of the objectives set forth in Section III b. The use of tax abatement will be limited to • Industrial development, expansion, redevelopment, or rehabilitation or • Commercial redevelopment or rehabilitation, or • Research and development facilities that satisfy Business Park zoning requirements, or • Office facilities with a minimum new construction of 25,000 square feet, or c. The developer shall demonstrate that the project is not financially feasible but-for the use of tax abatement. d. The city will consider the use of Tax Abatement assistance for projects that may not meet the but-for and job creation criteria, but rather would be considered as a “location incentive”. These projects may result in other public benefits such as a significant tax base increase, the creation of higher paying jobs (at least twice the minimum hourly rate stated in the city’s Business Subsidy Policy), and is likely to assist in the marketing and attraction of additional desired developments. Section III of the policy outlines the following objectives for the use of tax abatement: • To retain local jobs and/or increase the number and diversity of jobs that offer stable employment and /or attractive wages and benefits as defined in the City’s Business Subsidy policy • To enhance and diversify the City of Elk River’s economic base • To encourage additional unsubsidized private development in the area, either directly or indirectly through “spin off” development • To facilitate the development process and to achieve development on sites which would not be developed without Tax abatement assistance • To remove blight and/or encourage redevelopment of commercial and industrial areas in the City that result in high quality redevelopment and private reinvestment • To offset increased costs of redevelopment (i.e. contaminated site clean-up) over and above the costs normally incurred in development • To create opportunities for affordable housing • To contribute to the implementation of other public policies, as adopted by the city from time to time, such as promotion of quality urban or architectural design, energy conservation, and decreasing capital and/or operating costs of local government • To significantly increase the City of Elk River’s tax base