5.2.B. SR 09-14-2009 - Laserfiche WebLink

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ITEM 5.2.B. of fiver MEMORANDUM TO: Mayor & City Council FROM: Catherine Mehelich, Director of Economic Development DATE: September 14, 2009 SUBJECT: Concept Review -Shepherd's Ridge In addition to the planning and zoning approvals, staff has received a preliminary request for Tax Abatement from the developer, RS Eden for the proposed Shepherd's Ridge development. The developer has identified a financing gap in the amount of $416,000 in order to purchase the land and requests the City and/or County's consideration of tax abatement to assist the project. Following is staff s preliminary analysis of the Tax Abatement request: 1) Amount and Term of Tax Abatement The developer has estimated the end market value of the project at $4,306,200. Based on the 2009 tax rates, the project would result in total tax revenues of $75,085. The City's annual portion would be approximately $23,300 and the County's annual portion approximately $22,600. The City and County would need to provide up to 10-years of tax abatement in order to achieve the amount of assistance requested to support the project. If only the City participates then a minimum of 18-years of abatement would be required. The financing gap is a result of the requirement to purchase a larger parcel (4.74-acres) than is necessary to the development (3-acres), as well as the difference between its current office/commercial value and what the project can afford to pay at amulti-family housing value. The City's Abatement Policy states that tax abatement will not be used in circumstances where land and/or property price is in excess of fair market value. If fair market value were to be applied for the amount of property necessary to the development the financing gap is roughly $330,000-$360,000 for a minimum abatement term of 8-years City & County or 15 years City-only. 2) Use of Tax Abatement fox Housing The City of Elk River Tax Abatement Policy allows for affordable housing-related applications to be considered on a case-by-case basis and under separate criteria. At a