11. EDSR 04-08-2013 Elk REQUEST FOR ACTION
River
To ITEM NUMBER
Economic Development Authority 11.
AGENDA SECTION MEETING DATE PREPARED BY
April 8, 2(11 3 Clay Wilfahrt,Assistant Director of
Economic Development
ITEM DESCRIPTION REVIEWED By
Impact of City Financial Programs Suzanne Fischer, Community
Operations and Development
Director
REVIEWED BY
ACTION REQUESTED
Nome
BACKGROUND/DISCUSSION
The Economic Development Authority offers financial incentives to businesses to stimulate private
sector investment, spur new construction,and create and retain employment opportunities. Programs
offered by the City include Tax Increment Financing,Tax Abatement,and Microloans.
Staff maintains records for each business receiving a subsidy of$75,000 or greater on employment,
property valuation and current versus original tax revenue. Staff reviews business activity to determine
performance of financing programs.
One of the major benefits of business locations and expansions for a city is the addition of property value
(tax revenues) as shown on the graph below. The 13 Tax Abatement projects undertaken in Elk River
have generated over$47.6million in added property value. The original value of the same properties was
$3,538,300.
Aggregate Original vs.Added Property
$3,538,300
Value
Original Property Value
Added Value
$47,676,100
POWERED B Y
NATURE
The added property tax valuation leads to a proportionate increase in tax revenue. The properties that Elk
River stimulated with tax abatement had original annual tax revenue of$101K. After abatement and
subsequent property value increases,revenus increased to $1.9million.
Original vs. Added Tax Revenue
$101,347.00
Original Tax Revenue
Added Tax Revenue
$1,947,444.00
EDA's total investment for the 13 abatement projects measured was $2.7million. The tax revenue
increase alone equals the total investment by the EDA in shortly over one year.
Total EDA Investment vs. Annual
Added Tax Revenue
$3,000,000.00
$2,500,000.00
$2,000,000.00
•
$1,500,000.00
$1,000,000.00
$500,000.00
$_
EDA Investment Added Tax Revenue
Staff measured job creation before and after the EDA's investment. Companies employed 354 FTE's
prior to EDA's investment and 657 FTE's after investment, or an 86%increase in employment.
Jobs Before and After EDA
Investment
Created Before
303 Investment
35, `° Created After Investment
Finally, staff measured the impact of the four most recent TIF projects' on taxable market value. All
projects were certified between 1997 and 2004 and collectively, their original taxable market value was
approximately$3.6million. The same properties have a current taxable market value of$47.2million. The
EDA has invested$7.9million in the projects. Every dollar invested by the EDA induced over five
dollars of private investment.
Original vs. Current Taxable Market
Value
$50,000,000.00
$40,000,000.00
$30,000,000.00
$20,000,000.00 _
$10,000,000.00
$-
Original Market Value Current Market Value
Staff monitors the progress of EDA programs and will present performance measurement information
on an annual basis.