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TIF District No. 13 Page 3 <br />September 11, 1995 <br />increment from each of the years, the following estimate of the <br />"qualifying local contribution" is offered: <br />$2,727 (in 1998) plus $2,724 (in 1999) plus $2,720 (in 2000) plus <br />$2,717 (in 2001) plus $2,714 (in 2002) plus $2,710 (in 2003) <br />equals a qual~~nglocal contribution of $16,312. <br />TL Feeding System's tax increment grant would be reduced by <br />$16,312 over the life of District No. 13. <br />The Land Value Dilemma <br />Under apay-as-you-go TIF grant, the company/developer incurs the <br />cost of the land acquisition and site development/site preparation <br />costs. As the project begins generating property taxes, the <br />company/developer is reimbursed for the up front costs. over a period of <br />years. During the initial discussions with TL Feeding Systems, it was <br />suggested that the company program in $1.00 per square foot fora 3 <br />acre site.. This brings the acquisition price to nearly $135,000. <br />Country Ridge Partnership recently sold all of its Business Park <br />holdings to DMV Mall Corporation. According to a Certificate of Real <br />Estate Value, DMV paid in excess of $782,000 for approximately $7.5 <br />acres of land. DMV has listed its property with a real estate broker. <br />The quoted price of the Business Park property (for industrial users) is <br />$1.85 per square foot. <br />The writer of this memo has reason to believe that this price is not <br />reflective of the Elk River market value for industrial properties. This <br />is further supported by an EDA-authorized appraisal analysis that <br />was accepted by the EDA in June of 1994. Utilizing a matrix of <br />factors, the appraisal concluded that business park property in Elk <br />River should command, on the average, .90~ per square foot. Sites.. <br />along a frontage road would no doubt command a higher price than <br />internal. sites. However, a great disparity exists between the: quoted <br />price from the real estate broker and the EDA's expectations. <br />Since the EDA is not asked to acquire the property on behalf of TL <br />Feeding. Systems, the EDA would expect TL Feeding Systems to <br />negotiate a price that is reflective of reasonable market values.. Should <br />this not occur, the EDA simply does not have a TIF project. In <br />addition, as the acquisition price changes, the TIF budget and cash <br />flow analysis changes, too. <br />• <br />