7.1. SR 11-21-2011RE-QUEST FOR ACTION
TO ITEM NUMBER
Ma or and Ci Council 7.1.
AGENDA SECTION MEETING DATE PREPARED BY
Community Development November 21, 2011 Annie Deckert, Director of Economic
Develo ment
ITEM DESCRIPTION REVIEWED By
Consider Extension for Meeting Job and Wage Goals Under the Cal Portner, Ci Administrator
Tax Abatement and Business Subsidy Agreement for The Bank REVIEWED BY
of Elk River -Public Hearing
ACTION REQUESTED
Following the public hearing, the Council is asked to authorize a second extension up to two years to The
Bank of Elk River for meeting the wage and job goals outlined in the Tax Abatement & Business Subsidy
Agreement
BACKGROUND/DISCUSSION
In Apri12006, The Bank of Elk River entered into a Tax Abatement & Business Subsidy Agreement with
the city for the renovation and construction of a 20,000 sq. ft. expansion of its downtown facility, and
committed to retaining 63 employees and creating 20 full-time jobs at a wage of $15/hour by September
2009. Under the agreement, the developer is eligible to receive tax abatement for a portion of eligible
renovation costs up to $300,000 provided on spay-as-you-go basis.
Under the MN Business Subsidy Law, public agencies are required to report annually on the progress
toward job and wage goals for two years, or until the goals are met, whichever is later. As of the end of
September 2009, the developer created 10 full-time jobs. At that time, the developer requested atwo-year
extension to achieve their job and wage goals which the City Council approved on December 21, 2009,
extending their job creation deadline to September 2011.
The attached letter from The Bank of Elk River indicates the developer's response in their attempt to
achieve the wage and job goals. In 2011, The Bank experienced a re-organization/downsizing of the
company and eliminated 10 positions at the Main Street Office. As of September 30, 2011, The Bank
employs 59 full-time and eight part-time employees. Due to economic conditions, the developer is
requesting the city's consideration of up to a two-year extension to achieve these goals, allowing time for
economic conditions to improve and increase the demand for job growth. The request would extend the
job creation deadline to September 2013. The developer has been invited to the Council meeting to
answer any questions.
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 $78,572.61. The term of the tax abatement
f! N E R E lr 8 1
N:\PubGc Bodies\Ciry Council\Council RCA\Agenda Packet\11-21-2011\Jobs Goal Extension.docx ~~
is up to 12-years or until the reimbursement amount is reached. If the developer does not meet the goals
by the end of the extension term, the city retains the option to reduce the subsidy.
ATTACHMENTS
• Correspondence from The Bank of Elk River dated October 11, 2011
• Correspondence from The Bank of Elk River dated November 16, 2011
Action Motion by Second by Vote
Follow Up
N:\PubGc Bodies\City Council\Council RCA\Agenda Packet\i1-21-2011~Jobs Goal Extension.docx
~. ~
~Y a._
October 11, 2011
City of Elk River
Attn: Annie B Deckert
13065 Orono Parkway
Elk River, MN 55330
Re: Tax Abatement assistance
Dear Annie
Please find included with this letter the jobs reporting information as requested.
As you are aware, the Great Recession has significantly impacted our community and in turn, our ability
to achieve the job creation goals originally established in 2007.
At this time, we are requesting another two year extension to the agreement, which will allow economic
conditions to improve and increase demand for further job growth.
Your consideration is greatly appreciated.
If there are any questions, please do not hesitate to contact me directly at 753-241-8507.
Sincerely
Lego I Lindenfelser
Y
Chief Financial Officer
630 Main Street, Elk River, MN 55330 I p) 763-441-1000 ! f) 763-441-0847 I www.thebankofe/kriver.com I Memr~~FO,c
~~' Bank
November 16, 2011
City of Elk River
Attn: Annie B Deckert
13065 Orono Parkway
Elk River, MN 55330
Re: Tax Abatement assistance
Dear Annie
As a follow up to our recent conversation, I wanted to provide you some more details regarding the
bank and our outlook for the next two years, in the event that someone from the Bank cannot attend
the meeting on Monday.
As we discussed, job creation in the next two years for our business is largely dependent on the rate
of recovery the Elk River community realizes. We've recently restructured our business to better
position for future profitability. With this came reductions to staff and a focus on efficiency.
We are now staffed at a low point, so opportunities for growth and increased business will present
the potential for new job creation at the Bank.
As a community Bank, our successes and struggles mirror those of the businesses and communities
we directly serve. We are hopeful that the years to come will be prosperous not only for the Bank,
but for the entire Elk River community. Job creation will be a part of that prosperity.
Sin !rely,
Bill LaVigne ~3 ~~ v
Chief Operating Officer
630 Main Street, Elk River, MN 55330 ~ P) 763-441-1000 ~ f) 763-441-0847 ! www.thebankofe/kriver.com' MemberFOlc