4.0. SR 01-31-1994 - Laserfiche WebLink

Home Browse Search

JMJ 2 3 ,gg4 e e e Jan. 7, 1994 rc/.QJ\fJ~ To: Members Downtown Development Corporation From: Executive Committee 'Subject: Proposal for "Hole in the Ground" On Thursday at an officially called meeting, seven members who attended were favorably impressed with a plan to build a 12,000 square foot, $625,000 office-retail building on the site once occupied by Elk River Hardware. Following the presentation, those who attended (not a quorum) decided to: 1. Write this letter 2. Start a petition of business owners on behalf of the project. Stop at Johnson's Department Store and sign the petition. 3. Meet informally with members of the City Council. During the presentation we were surprised to hear that Mayor Hank Duitsman was quoted as saying no downtown retailer is in favor of the development. The proposal is to build a two-story, 12,000 square foot retail-office building at an estimated finished market value of $625,000. The first floor would be occupied by a Carpet One store, the nation's largest flooring retailer. The property would be a Tax Increment Financing District and the TIF subsidy to the developer to make the site buildable would be $165,000 plus a discount on the land of$70,000. There would be a mortgage against the property of $40,000 which together with the $70,000 would make up what the city paid for the property. . The building owner- developer, Kurt Kjellberg would pay $28,000 of property taxes each year for up 15 years to pay the TIF bond and to pay the city for its land acquistion costs. The plan has been approved by the Economic Development Authority (ED A). It has been recommended by the Planning Commission. On Dec. 20, the council voted 3-2 to reject it. The vote was John Dietz, Duitsman and Larry Farber opposed and Roger Holmgren and Cecilia Scheel for. The council agreed, however, to reconsider the matter on Jan. 31. It is on the agenda of the Elk River Chmber of Commerce Board of Directors Tuesday. These are the points that favorably impressed those attending the Jan. 6 presentation. 1..The Downtown needs a retail-office building on the site which is now an eyesore and a depressant to business. 2. Tax Increment Financing is designed to aid in the rehabilitation of deteriorating urban structures. 3. The amount of tax increment financing, $165,000 is needed to make the site buildable. It is a 20-foot grade change. The city would have to pay at least $100,000 to make it into a park which would not yield any tax dollars. The entire TIF would be entirely paid back by property taxes from the developer. Another $70,000 would be recaptured by TIF and another $40,000 would be mortgaged against the property to pay the city's land acquisition costs. It is impossible to reduce the TIF requirement because rent would become too high. 4. The Kjellberg building is a Carpet One Store, a home shopping center, will occupy the first floor. The story below will be a combination of retail and office space. The development would have to have a 70 percent commitment from tenants before it would be started. 5. If the business failed for some reason, there would be a building to re-lease. In the words of one member, this is a win-win project. The Downtown gets a badly needed development to attract traffic and the city gets a taxable property. ~~'l~d--