3.4. SR 08-28-2000City of
ITEM 3.4.
TO:
Rive o :
Elk River City Council
Cathy Mehelich, Director of
Economic Development
DATE:
August 25, 2000
SUBJECT:
Consider Resolution Regarding Business
Subsidy for Santwire (Norha) and Ripplinger
Projects
Issue
Per state law, any subsidy agreement issued by the EDA must receive
approval by the City Council.
Background
The City Council on its August 14, 2000 meeting reviewed and approved
providing subsidy assistance to the Santwire project, specifically to Equity
Management, Inc. (Norha) and David & Carole Ripplinger for their industrial
development projects.
Equity Management, Inc. and the Ripplingers were approved to receive
subsidy assistance in the estimated value of $175,900 each. The assistance
was to be provided via a land sale write down at 100% less than current
market value, subdivision expenses, and a portion of utility extension
expenses incurred by the EDA for the project.
The project goals established for the subsidy included the construction by
Equity Management, Inc. of a 22,500 square foot multi-tenant building, and
the construction by the Ripplingers of a 15,200 square foot mixed owner
occupied and investment building. The Ripplingers also agreed to create up
to 4.5 new full time equivalent employment positions, in addition to their
existing 5 jobs, with wage levels of at least $15.00 per hour.
The Ripplingers have proposed to expand their building size to 22,500 square
feet in order to provide additional multi-tenant light industrial space that is
needed in Elk River. Mr. Santwire has requested that the EDA absorb all of
the cost for the extension of utilities from the street to the site in exchange
for the larger building. The original estimate was $10,000 which was agreed
to be split by the EDA and developers. Please refer to the attached memo by
the City Administrator.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone (763) 441-7420 · Fax (763) 441-7425
Requested Action
The building expansion is consistent with the City's Economic Development
Strategic Plan to provide more leasible space and increase the industrial tax
base of the community. EDA members have been provided the opportunity to
comment on the proposed amendment to the subsidy assistance agreements.
Therefore, staff recommends the City Council consider amending the
resolutions which revise the total estimate of assistance from $175,900 each
to $178,400 each with the revised project goal of 22,500 square feet each.
Since the primary use of these buildings is multi-tenant, it is very difficult to
expect the owner to guarantee specific job and wage goals on behalf of
prospective tenants. However, it can be projected that the multi-tenant space
provided by each could result in up to 30 full time equivalent positions as
compared to similar projects in Elk River.
Attachments
· Resolutions 00-62 and 00-63 Approving Subsidy Assistance to
Equity Management, Inc. and David & Carole Ripplinger
· Memo from City Administrator Re: Development of EDA Site
Resolution 00- Amending Resolutions 00-62 and 00-63
Approving Subsidy Assistance
RESOLUTION 00-.fi2_
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 1 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.
Sandra A. Peine, City Clerk
Stepl~nie Klinziff~ayc(r
RESOLUTION 00-6't
CITY OF ELK RIVER
A RESOLUTION APPROVING SUBSIDY ASSISTANCE TO
DAVID & CAROLE RIPPLINGER
Whereas, David & Carole Ripplinger have filed an application for subsidy
assistance for the construction of an 15,200 square foot light industrial
building on the south half of Lot 1, Block I of the Country Crossing Business
Center Second Addition, Elk River, MN;
Whereas, David & Carole Ripplinger have submitted a Tax Increment
Financing application that satisfies the requirements of the City of Elk
River's Tax Increment Financing policy;
Whereas, David & Carole Ripplinger are 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 goals of the project include the construction within one year of
the benefit date, a 15,000 sf light industrial 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) Job creation.
Now Therefore Be It Resolved, the Elk River City Council approves
providing subsidy assistance as outlined in the Performance/Assistance
Agreement with David & Carole Ripplinger for the purposes of industrial
economic development as described above.
Where Upon the resolution is adopted and passed this 14th day of August
2000.
S/andra A. Pein~, C~ty Clerk
- Step~anie Khnmng~ayor
~ity of
iver
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Economic Development Authority
Pat Klaers, City Administrator
August 17, 2000
Development of the EDA Site
On August 14, 2000, the EDA agreed to the Santwire (Norha) and Ripplinger
development projects on the EDA site. This included the city splitting with
the developers the approximately $10,000 cost for the extension of sewer and
water into the site. The Ripplinger project is proposed at 15,200 square feet
and the Norha project at 22,500 square feet. Both of these building sizes were
larger than the initial proposal in July.
After the August 14 meeting, Mr. Santwire advised us that he believes it is
possible that the initial Ripplinger project could be expanded to 22,500
square feet, which would provide more leasable space for business park
prospects. This is consistent with the Economic Development Strategic Plan
have more leasable space available, have the site built out to 45,000 square
feet, and have more taxable value in the community. The requested incentive
from the EDA for this additional 7,300 square feet is that the EDA absorb the
total cost for the extension of utilities from the street to the site. The original
estimate was $10,000 and at the 8/14 meeting the EDA had agreed to absorb
half. I believe it is appropriate for the EDA to absorb all of this cost in
exchange for a larger Ripplinger building and we have every indication that
the $10,000 cost estimate is high and that the actual expenses will be in the
$7,000-$8,000 range. As before, the funding would come from the EDA
reserve.
No changes need to be made in the EDA action of August 14 for this
additional EDA contribution into the project. If any EDA member has
concerns about this additional contribution of a few thousand dollars into the
project, please let me know. Otherwise, I will advise Mr. Santwire with our
concurrence of his request and we will both proceed accordingly.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
RESOLUTION 00-
CITY OF ELK RIVER
A RESOLUTION AMENDING
RESOLUTION 00-62 AND RESOLUTION 00-63
APPROVING SUBSIDY ASSISTANCE
Whereas, the City Council reviewed and approved by Resolution No. 00-62 and 00-
63 the applications for subsidy assistance submitted by David & Carole Ripplinger
and Equity Management, Inc. ("Recipients") in the estimated amount of $175,900
each to be provided by the Economic Development Authority, and;
Whereas, the City had established and the Recipients agreed that the project will
satisfy at least two public purposes and meet specific project goals, and;
Whereas, the Recipients have agreed to construct a minimum of 22,500 square feet
each, and the Recipients have requested additional subsidy assistance in an
estimated amount of $2,500 each to be provided by the Economic Development
Authority incurring 100% of the expense for water and sewer extension to the
property line, and;
Whereas, the Recipient project is consistent with the Economic Development
Strategic Plan and will result in more industrial taxable value in the community by
providing additional leasible light industrial space, and which has the potential for
job creation.
Now Therefore Be It Resolved, the Elk River City Council amends Resolution
No. 00-63 and 00-62 to provide subsidy assistance as outlined in the form of a
subsidy agreement to David and Carole Ripplinger and Equity Management, Inc. in
the revised total estimated amount of $178,400 each, and the City has established
that the specific project goals are revised to be the construction of a minimum of a
22,500 square foot light industrial building to be completed within one year of the
benefit date, and the job goals established herein remain.
Where Upon the resolution is adopted and passed this 28t~ day of August, 2000.
ATTEST:
Stephanie Klinzing, Mayor
Sandra A. Peine, City Clerk