6. HRSR 01-03-2006 - Laserfiche WebLink

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Consider Tax Rebate Financing for The Bank of Elk River Expansion Project January 3, 2006 HRA Meeting Page 2 of 4 been evaluating the pros and cons of either expanding its corporate office facility located downtown, or to relocate its corporate offices to its commercial location in Otsego. In response to The Bank's financial challenge, staff provided The Bank with the attached correspondence dated April 11, 2005 offering a recommendation for the City's consideration of TRF for the proposed expansion project using the tax revenues derived from the increased market value as a result of the expansion for a maximum period of 10-years. Staff estimated that depending on the increased market value that a range of $410,000 - $559,000 could be generated by the City and County combined over a 10-year period. At its July 11, 2005 work session the Council discussed The Bank's challenges to expanding downtown. As stated in the attached meeting minutes, the Council indicated support for the use of TRF for the proposed project. In addition, the Council indicated that the expansion project, and future expansions, of The Bank would not be denied by the Council based on a lack of parking. Analysis Since the HRA normally does not review TRF requests, attached is an Abatement fact sheet, defining Abatement and summarizing its statutory history. No But For Anal The Bank is requesting that the City rebate its portion of the property taxes up to $300,000, along with a matching amount from Sherburne County, for a total of $600,000. Normally a financial but for analysis would be completed to determine the amount of public assistance necessary for the project to proceed but this TRF application is being processed under the premise that The Bank is incurring substantial additional construction costs by converting the existing facility. This project meets all of the commercial redevelopment objectives found in Section III of the City's TRF Policy. Specifically, found in Section I of the City's TRF policy, it states that "The fundamental purpose of tax rebate financing in Elk River is to encourage desirable development or redevelopment that would not otherwise occur but for the assistance provided through TRF." Additional Construction Costs On page five of The Bank's attached TRF application, the contractor estimates that significantly more costs, approximately $940,000, will be incurred to remodel and expand the existing structure as compared to building a similar size structure on the Otsego property. The Bank has stated that without tax rebate the project would be built in Otsego. Functionally, maintaining adequate parking and drive thru access is a challenge due to the shape and size of the lot. In addition, an expansion to the downtown facility presents an opportunity for additional revitalization in the downtown through private investment and expands the downtown employment and customer base which will support small businesses in the central business district. The Application The Bank has submitted a complete application to the City for Tax Rebate Financing. Staff has evaluated the application based on the City's attached TRF Proposal Review Worksheet S:\EDA\TAXABATE\Bank of Elk River\Memos\1.3.06 HRA.doc