7.1. SR 05-18-2009 - Laserfiche WebLink

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City of Elk. River REQUEST FOR ACTION To Item Number Ma or & Ci Council 7.1. Agenda Section Meeting Date Prepared by Community Development May 18, 2009 Catherine Mehelich, Director of Economic Develo ment Item Description Reviewed by Consider Extending Time for Meeting Wage & Job Goals Lori ohnson, Ci Administrator Under the Tax Abatement and Business Subsidy Agreement for Reviewed by Provo Enterprises, LLC Project -Public Hearing Action Requested Following the public hearing, the Council is asked to authorize an extension up to three years to Provo Enterprises, LLC (Alliance Machine, Inc.) for meeting the wage and job goals outlined in the Tax Abatement & Business Subsidy Agreement. Background/Discussion In August 2005 the developer, Provo Enterprises, LLC entered into a Tax Abatement & Business Subsidy Agreement with the City, committing to constructing an 18,000-sf industrial building in Northstar Business Park and relocating 30 existing employees in addition to creating nine jobs at an average wage of $15/hour by May 19, 2008. Under the agreement the developer is eligible to receive the value of a portion of the property in the amount of $103,978 provided on apay-as-you-go basis (commencing 2008). In addition, the EDA provided a $100,000 Micro Loan to the project. Under the MN Business Subsidy Law, public agencies are required to report on the progress toward job and wage goals annually for two years, or until the goals are met, whichever is later. As of the end of 2008, the developer has indicated an employment level of 24 full-time positions at an average wage of $21 /hour. The attached letter from Alliance Machine indicates the developer's response in their attempt to achieve the wage and job goals. Due to economic conditions, the developer is requesting the City's consideration of up to a three year extension to achieve these goals. The request would extend the deadline to May 19, 2011. The developer has been invited to the Council meeting to provide additional information. Staff recommends in consideration of economic conditions and the developer having exceeded the average wage goal for positions held, that the City Council authorize a three year extension fox meeting the job and wage goals established in the agreement. Financial Impact The agreement allows that if goals are met in part, the City has the option to reduce the subsidy on a prorated basis to the jobs created, or consider an extension of the term to meet the goals. To date the developer has received total tax abatement in the amount of $9,105.28. The term of the tax abatement is up to 15-years with real estate taxes payable through 2022 or until the reimbursement amount is reached. S:\EDA\BUSINESS SUBSIDY\State Reporting\2008\Provo\Action Requested 5.18.09.doc