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The Elk River Vision <br />A welcoming community with revolutionary and spirited resourcefulness, exceptional <br />service, and community engagement that encourages and inspires prosperity. Updated: January 2023 <br />Request for Action <br />To <br />Joint Finance Committee <br />Item Number <br />4.2 <br />Agenda Section <br />General Business <br />Meeting Date <br />April 30, 2024 <br />Prepared by <br />Brent O’Neil, Economic Development Director <br />Item Description <br />Heritage Millwork Project and Incentive Applications <br />Reviewed by <br />Joshua Mollan, Economic Development Specialist <br />Reviewed by <br />Action Requested <br />Review and discuss the Tax Increment Financing (TIF), and adopt, by motion, an official recommendation on <br />utilization of TIF for Heritage Millwork. <br />Background/Discussion <br />Heritage Millwork is a wholesale building materials supplier, primarily offering several door products through <br />distribution throughout the Midwest. The company currently operates out of three facilities, two in Ramsey, and <br />one in Elk River, and are looking to gain efficiencies and plan for growth by consolidating in a single facility. A <br />property owned by the City of Elk River has been identified as the preferred site for the new facility and Heritage <br />has been actively working through plans to develop the site. <br />The site is 14 acres in the Nature’s Edge Business Park, owned by the City of Elk River, at an offer of $2.25 per <br />foot, or about $1,375,000. The total project costs total in excess of $21MM of which $12 MM is estimated for <br />construction of a 113,000 ft. building. The project will result in the location of 70 jobs in an Elk River facility, <br />with near-term growth of head count to 75 to 80. In the mid-term, Heritage is designing the facility and site plan <br />to accommodate an additional 40,000 ft. for growth of its operations. <br />Heritage has requested participation in three city programs to successfully support the project: 1) TIF, 2) <br />Business Microloan, and 3) Energy Incentive. TIF has been discussed with the company and we received an <br />application in early 2024. While the loan and energy programs were also discussed, those applications were <br />received in April and will need sufficient review prior to requesting action of the committee. They are attached <br />for your review, however. <br />To assist in the TIF review, the City’s financial advisor Baker Tilly has provided an analysis of the TIF <br />application and supporting information. Mikaela Huot is Baker Tilly’s chief representative on this project. Her <br />analysis is provided in the attached memo. Staff and Ms. Huot will discuss the project and analysis at the meeting. <br />It is anticipated the project would be presented to the EDA May 20, and to the City Council in June. Staff is <br />requesting the committee adopt a recommendation on utilization of TIF on this project for EDA and Council <br />consideration. <br />Financial Impact <br />TIF has been requested to write-down the price of a land purchase of $1,375,000.