7.1 SR 06-03-2024 (2) - Laserfiche WebLink

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The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To City Council Item Number 7.1 Meeting Date June 3, 2024 Prepared By Brent O'Neil, Economic Development Director Item Description Resolution 24-30: Tax Increment Financing District and Plan for Heritage Millwork, Inc. (TIF No. 29) Reviewed by Brent O'Neil Cal Portner Tina Allard Action Requested Following the public hearing, adopt by motion, Resolution 24-30 creating TIF District No. 29 and adopting the TIF plan. Background/Discussion At its May 20, 2024, meeting, the EDA reviewed a TIF application to support the construction of a new facility for Heritage Millwork, Inc (HMI) and recommended the application be forwarded to the City Council for adoption. HMI is a provider of pre-hung doors and other millwork products for the building industry. Heritage presently operates out of two facilities in Ramsey and a small facility in Elk River. The company has been looking to consolidate operations in a single facility that allows for operational efficiencies and the ability to expand. The selected site is a 14.06-acre portion of city-owned property in the Nature's Edge Business Park. The city has negotiated a proposed sale of the property to PLM Properties, an associated entity of Heritage. The project will be a great addition to Elk River and meets many of the goals of the city and EDA. In addition to retaining eight Elk River positions, the company will locate 70 positions in Elk River at project completion, with seven more expected within two years. Further, with adequate land for future expansion, the company anticipates more job growth in five to 10 years. The project will entail an investment of over $20,000,000 including a building of 113,000 square feet and new machinery. In addition to the EDA review and support, financial advisor Baker Tilly has been actively involved in analyzing the terms and drafting the TIF plan. The included memo from Baker Tilly provides further information on the project and an analysis of the TIF request. In short, the project proposes to utilize TIF to write down the price of the land for the project. This analysis supports the purchase price of the city land of approximately $1,375,000 through proceeds of TIF. There are multiple steps to supporting this project, including approving a business subsidy agreement and selling the subject property. The creation of this TIF district is the initial approval in this process. Page 363 of 464