7.3 SR 05-15-2023 - Laserfiche WebLink

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Request for Action To Item Number Mayor and City Council 7.3 Agenda Section Meeting Date Prepared by Public Hearings May 15, 2023 Brent O'Neil, Economic Development Director Item Description Reviewed by Abatement Request: Harvest Reaper (Beaudry Oil) Cal Portner, City Administrator Reviewed by Action Requested Adopt, by motion, a resolution granting a property tax abatement for Harvest Reaper, LLC. Background/Discussion The City of Elk River has received a tax abatement application from Harvest Reaper, LLC, and Beaudry Oil to operate a new lubricants operation at a new site on Elk Lake Road, approximately one-half mile north of its current operations. The new venture would be operated as Beaudry Lubricants, with the property to be developed and owned by Harvest Reaper, LLC, an affiliated real estate company of Beaudry Oil. Harvest Reaper would be the beneficiary of the abatement. The abatement request was submitted to both the city and Sherburne County for a total amount of $645,000, citing extraordinary site development costs due to wetland configuration and mitigation on the site, and the necessity of a water main extension from Industrial Blvd. to provide adequate water suppression systems. The new project has a total investment of $4.3 million. It would result in a new 25,OOOsf. facility and a projected range of 14 to 20 new jobs to the community over the next five years. Nlikaela Huot of Baker Tilly has reviewed the application and submission materials. In summary, the Baker Tilly review advises a total city abatement amount of $138,204, or 100% abatement for 11 years tied largely to the extension of the water main to the site at a cost of $166,000. Further, the city's abatement policy has a scoring rubric in which this request shows a score of 37 out of 45. This corresponds to a maximum abatement eligibility of 75% (maximum eligibility is nearly $190,000). Sherburne County has considered and approved abatement for a portion of county taxes over a period of 10 years. The total amount of city and county abatement would be approximately $200,000 over the abatement period. This project has been presented to the Joint Finance Committee UFC) and EDA for review, with both entities recommending the City Council approve an abatement in the amount of $138,204. This resolution additionally authorizes the execution of a tax abatement and business subsidy agreement between the city and Harvest Reaper outlining the implementation and requirements of the abatement. Of the jobs proposed for the project, the agreement requires at least seven be created within two years at a wage of at least $31.77. The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires pi ospei ly. M TUREJ Updated.- Januag 2023