5.3. SR 08-14-2000of
Item 5.3.
River o:
Elk River City Council
FROM:
Cathy Mehelich, Director of
Economic Development
DATE: August 10, 2000
SUBJECT:
Consider Performance/Assistance
Agreement with Equity Management,
Inc.
Issue
Per state law, any subsidy agreement issued by the EDA must receive
appr0val by the City Council.
Background
Equity Management, Inc. (Linda Norha) has proposed to construct a
22,500 square foot multi-tenant light industrial building on half of a
site currently owned by the EDA (located at Joplin Street & 183rd
Ave).
Equity Management has requested that the EDA provide the following
assistance in order to encourage the development project to occur:
· Subdivide the property into two lots $ 8,000
· Transfer the north half of the property $165,400
to Equity Management, Inc. at a 100%
write down of market value
· Split the cost of water/sewer installation $ 2,500
Total value of assistance requested
$175,900
Current market value of the 4.36 acres is $330,800. The City of Elk
River purchased the property in December 1997 with excess tax
increment finance revenues in the amount of $198,750. The property
was then transferred to the EDA for sale and marketing.
Limitations exist on the EDA sale of the property since the purchase
was last funded by tax increment finance dollars. Any sale proceeds
would be considered increment and would need to be returned to the
County for distribution. The source of funds for subdivision expenses
and water/sewer installation would come from the EDA reserve fund.
13065 Orono Parkway ' P.O. Box 490 · Elk River, MN 55330 ' TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
Staff has evaluated the Equity Management's Tax Increment
Financing Application and has determined that subsidy assistance is
appropriate for the project based on the level of assumed risk for the
investment project and the project goals to be met by the development.
The public purposes to be met by the development include 1) Enhance
& diversify the City's industrial tax base, and 2) Contribute to the
fulfillment of the City's Strategic Plan for Industrial Development,
and 3) Eventual job creation. The project has potential to stimulate
additional private investment in the West Business Park and also
provide leasible light industrial space that is currently lacking in Elk
River.
Following the public hearing, the EDA may determine that the
creation of jobs is not a primary goal of the project and henceforth, set
wage and job goals at zero. The EDA may consider an alternative
project goal for the subsidy to be the construction of a minimum of
22,000 square feet of leasible light industrial space within one year.
Requested Action
The EDA will make verbal recommendation to the Council for
consideration of the attached Resolution 00- Approving Subsidy
Assistance to Equity Management, Inc. following its public hearing.
Attachments · Site Map
· Tax Increment Financing Application - Equity
Management, Inc.
· Performance/Assistance Agreement with Equity
Management, Inc.
· City Council Resolution 00- Approving Subsidy
Assistance to Equity Management, Inc.
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SHEET 2 OF 2 SHE/TS
RESOLUTION 00-
CITY OF ELK RIVER
A RESOLUTION APPROVING SUBSIDY ASSISTANCE TO
EQUITY MANAGEMENT, INC.
Whereas, Equity Management, Inc. has filed an application for subsidy
assistance for the construction of an 22,500 square foot multi-tenant light
industrial building on the north half of Lot 1, Block I of the Country Crossing
Business Center Second Addition, Elk River, MN;
Whereas, Equity Management, Inc. has submitted a Tax Increment
Financing application that satisfies the requirements of the City of Elk
River's Tax Increment Financing policy;
Whereas, Equity Management, Inc. is requesting subsidy assistance in the
value of $175,900 to be provided by a land sale write down at $165,400 less
than market value, approximately $8,000 in subdivision expenses incurred by
the EDA, and an estimated $2,500 for utilities extension;
Whereas, the EDA has determined that creation of jobs is not a primary goal
of the project and has held a public hearing to consider public input, and has
established, an alternative goal of the project to be the construction within
one year of the benefit date, a 22,000 sf multi-tenant building.
Whereas, the project will satisfy the following public purposes:
1) enhancement and diversification of the city's economic industrial base, and
2) contributes to the fulfillment of the Strategic Plan for Economic
Development, and 3) Result in additional private investment in the area and,
4) eventual job creation.
Now Therefore Be It Resolved, the Elk River City Council approves
providing subsidy assistance as outlined in the Performance/Assistance
Agreement with Equity Management, Inc. for the purposes of industrial
economic development as described above.
Where Upon the resolution is adopted and passed this 14th day of August
2000.
ATTEST:
St.ephanie Klinzing, Mayor
Sandra A. Peine, City Clerk