6. HRSR 01-03-2006 - Laserfiche WebLink

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Consider Tax Rcbatc Financing for'Phe Bank of Elk River Expansion Project January 3, 2006 I IRA Meeting Page 3 of 4 to measure the strength of the project against the city's goals and objectives for the use of TRF. The project scored 44 out of 50 possible points, which equates to a "highly desirable" project. Sherburne County Assessor's Review The Sherburne County Assessor's office has recently reviewed the building plans for the proposed expansion. Per the attached letter, the Assessor's office has estimated the total project market value upon completion to be $4,539,600. The estimated increase in market value as a result of the expansion project is $2,932,900. The following table indicates the breakdown between existing and new estimated market value as a result of the project: Existing New Estimated Total Estimated Market Value Market Value Market Value Market Value $1,606,700 $2,932,900 $4,539,600 Total Tax Payable $58,648 $109,505 $168,153 Annual City Portion $12,000 $27,400 $39,400 Annual County Portion $12,000 $27,000 $39,000 Tob and Wage Goals The Minnesota Business Subsidy Law requires projects which receive over $25,000 of public financing assistance to meet job and wage goals as established by the city. A requirement of the financing assistance to The Bank will include a commitment for the creation of 20 new full-time positions as a result of the expansion project at a minimum hourly wage of $15.00 within two years of project completion. Requested Action Staff is of the opinion that there are three options for consideration of providing TRF for the proposed project. The HRA is considering a recommendation to the City Council for the City's TRF portion, which is $300,000 of the total $600,000 request. 1. Recommend the Council approve providing up to $300,000 based on 100% of the city's annual portion of tax revenue generated from the property (both existing and new market value). This option would extinguish the obligation over a period of approximately 8 years. The concern with this option is that the City's general fund would not annually receive the $12,000 of existing value. 2. Recommend the Council approve providing up to $300,000 of TRF based on all of the new market value and some portion of the existing value in order to keep the term at a maximum period of 10-years. 3. Recommend the Council approve providing up to $300,000 of TRF based on only the new market value. This option would require the city to extend the term of the abatement up to 12 years in order to reach the full amount of assistance, but would allow the city to retain the existing tax base. S:\EDA\TAXABATE\Bank of Elk River\Memos\1.3.06 HRA.doc