7.1 EDSR 05-20-2024 - 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 Economic Development Authority Item Number 7.1 Meeting Date May 20, 2024 Prepared By Brent O'Neil, Economic Development Director Item Description Heritage Millwork Tax Increment Financing Reviewed by: Cal Portner Action Requested Adopt, by motion, a recommendation to the City Council for the approval of the Tax Increment Financing (TIF) plan for Heritage Millwork. Background/Discussion Heritage Millwork is a provider of pre-hung doors and other millwork products to the building materials 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 in the future. 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, which is planned for Council consideration in June. 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 in total at project completion with seven more 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 order to facilitate the development of the project, Heritage has requested participation of incentive programs, including TIF. The attached 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. Staff will provide a detailed presentation on the project and the TIF proposal during the meeting. The EDA is asked to submit a recommendation to the City Council for its consideration of the TIF request at its June 3rd meeting. The EDA may recommend approval, denial, or approval with modifications. Financial Impact An affirmative recommendation of the EDA would forward to the City Council a proposal to use approximately $1,375,000 in future tax increments to support the Heritage Millwork project. Page 11 of 64