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of the city's net tax capacity. Considering this option, the following <br />calculation is offered as it relates to the Mowry/Neos TIF request: <br />• $80,000 TIF grant times 10 percent equals $8,000 "local <br />contribution:' <br />According to some legislative followers, the alternative to opt out of the <br />LGA/HACA reduction is the best news in years. Additional <br />information on the specifics of the "qualifying local contribution" can <br />be found on Page 2 of a May 24 memo from Jim O'Meara of Briggs and <br />Morgan. <br />Options to fund the qualifying local contribution may include city <br />funds, EDA funds, or other sources. The basic restriction is that the <br />contribution must come from unrestricted monies. <br />B. Maximum TIF Grant <br />The second issue discussed at the EDA public hearing for the <br />Mowry/Neos TIF request was that of a cap on TIF assistance. <br />Initially, Mowry/Neos discussed a $60,000 TIF grant to cover the <br />acquisition price of Lots 6 and 7, Block 1, McChesney Industrial Park. <br />In its TIF application to the EDA, an $80,000 grant was requested - <br />the additional $20,000 being attributable to site preparation and site <br />development costs. The initial building proposed by Mowry/Neos was <br />that of a 16,000 square foot facility with a land and building value of <br />$585,000. The percentage of TIF grant to finished market value was <br />calculated 13.67 percent (i.e., $80,000 TIF grant divided by fmished <br />market value of $585,000). <br />At the June 12 EDA hearing, the proposed building was reduced to <br />12,000 square feet with a finished market value (land and building) <br />estimated at $375,000. The percentage of the $80,000 TIF grant <br />attributable to the finished market value is estimated at 21.33 percent <br />($80,000 TIF grant divided by fmished market value of $375,000). <br />EDA Commissioners noted that while the project's finished market <br />value was reduced significantly, the TIF assistance remained the same <br />- due in part to those costs (i.e., land acquisition and site development) <br />remaining fixed. EDA Commissioners suggested at the June 12 public <br />hearing and at the following workshop, that the city and EDA explore <br />the merits of a maximum TIF grant on a project by project basis. <br />Please be advised that the existing TIF policy for Elk River addresses <br />• that issue. Section V of the TIF policy guidelines indicates that <br />