7.4. SR 08-19-2013 /i
ECly l Request for Action
Rive'r'
TO ITEM NUMBER
Mayor and City Council 7.4
AGENDA SECTION MEETING DATE PREPARED BY
Public Hearings August 19, 2013 Clay Wilfahrt,Assistant Director of Economic
Development
ITEM DESCRIPTION REVIEWED By
Preferred Powder Coating tax abatement Brain Beeman,Director of Economic
Development and Jeremy Barnhart,Deputy
Director CODD
REVIEWED BY
Cal Portner, City Administrator
Action Requested
None.
Background/Discussion
Preferred Powder LLC submitted an application for tax abatement for $576,939 to the city and the
county for the construction of a 100,000 square foot manufacturing facility in the city-owned Nature's
Edge Business Center.
The city held a public hearing and approved abatement in the amount of$576,939 on July 1. The county
interpreted state statute as such that they would only remit abatement payments to the developer. For
the proposed business subsidy, the city planned to issue a loan to the developer with repayment through
the tax abatement. The need to recover tax abatement from the developer added exposure to the city.
The county has remitted payment of tax abatement directly to the city in similar past abatement
agreements.
After considerable negotiation with Interim County Administrator Dan Weber and Assistant County
Attorney Tim Sime,the city agreed to guarantee the entire abatement amount of$1,153,878 (land write-
down and internal loan) in return for a direct payment from the county. The concession was a large
benefit to the county,but provided security for the city. The change in the loan subsidy amount required
another public hearing for the higher amount,which was intended to be held this evening.
At the county's public hearing on August 13, Commissioner Riebel motioned to approve an abatement
amount of$400,000 over 8 years, or $176,939 less than was required to finance the project as prescribed
by Springsted in their independent financial analysis of the project,which is required by city policy.
Further,the decreased term of 8 years, from the pro forma requirement of 12 years,is certain to not net
enough abatement. Commissioners Petersen and Schmiesing voted in approval of the lower abatement
despite the lack of financial documentation to support the changing terms for the project.
The approved total abatement subsidy of$976,939 is not enough to enable the project to proceed
therefore there is no need to hold the public hearing regarding tax abatement.
Financial Impact
None
P O W E R E D BY
NaA f RE]