EDSR MEMORANDUM 02-02-1998 - Laserfiche WebLink

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ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MEMORANDUM TO: Economic Development Authority FROM: Paul T. Steinman,Director of Economic Development DATE: February 2, 1998 SUBJECT: EDA Worksession 3.1. Review/Discuss Tax Increment Request from Morrells Morrell &Morrell, Inc., has requested tax increment assistance in the amount of$300,000 to facilitate construction of a new trucking facility on 171st Avenue. As per the attached schedule for establishment of TIF District 18, staff is moving through the process of putting together the Tax Increment Plan and a Development Agreement for this project. 411 There are several significant issues with regard to providingthe g requested assistance to this project. These issues are as follows: • Is the amount of the tax increment request within the guidelines of the Tax Increment Policy? The Morrell's current estimate of construction costs of their new facility is approximately $2.2 million. Staff typically uses this estimated construction amount to estimate the finished market value of the project. The finished market value is used to determine the amount of tax increment assistance provided to the project the guidelines indicate this to be 15 percent maximum. In this case staff is using $2 million as the finished market value of the project, of which 15 percent equals $300,000 the precise amount being requested by Morrell & Morrell. • Up front payment of tax increment versus pay-as-you-go. The EDA provided direction to staff to proceed with the plan based upon providing the requested assistance over time on a pay-as-you-go 13065 Orono Parkway • P. O. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420• Fax (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment