9.0. EDSR 07-11-2005 ITEM # 9.
•
City of
Elk -�-�
River
MEMORANDUM
TO: Economic Development Authority
FROM: Heidi Steinmetz, Assistant Director of Economic Development
DATE: July I I, 2005
SUBJECT: Consider Tax Rebate Financing Assistance for Classic Acrylics,
Inc.
Attachment
• Site Location
Issue
• Staff has been working with Classic Acrylics since the Fall of 2004 to identify a site and
financing assistance to relocate and expand the company's operations to Elk River. The
EDA is asked to review and consider recommending that the City Council call a public
hearing on the proposed Tax Rebate Financing (TRF) assistance request and business
subsidy to the company.
Project Description
Established in 1998, Classic Acrylics specializes in custom plastic fabrication for point-of-
purchase displays. The company is owned by three brothers, Stuart,Ron and Tom
Patterson. The company currently employs 13 full-time staff with an average hourly wage of
$15.00 per hour. Within two years of the expansion the company proposes to create five
new jobs with an hourly wage of$15.00 exclusive of benefits required by law.
The company currently leases 10,000 square feet in Dayton and is seeking a location within
the northwest metro area to relocate and expand in time for lease expiration.
Classic Acrylics proposes to construct a 20,000 square foot light industrial building on a
2.48-acre lot in Elk River Business Park, occupying 100% of the space. The lot
accommodates an additional 5,000 square feet for Classic Acrylics' desired future expansion.
Proposed Tax Rebate Financing Assistance
Staff has proposed financing assistance in the form of a pay-as-you-go Tax Rebate Financing
(TRF) note to the company in an amount up to 77% of the land cost at$150,000. The
amount of the assistance has been established based on providing a land cost write down of
Consider Tax Rebate Financing Assistance for Classic Acrylics,Inc.
July 11,2005 EDA Meeting
Page 2 of 2
$30,000 per new job created at a minimum hourly wage of$15.00 exclusive of benefits
• required by law. Staff negotiated the financing assistance for this project based on assistance
provided to Gradient Technology and Orluck Industries and prior to opening Northstar
Business Park.
Using the following formula the project is eligible to receive 77%write down on the land
cost through a pay-as-you-go TRF note.
Land Cost: 2.48 acres @ 1.80/sf $194,452
Eligible Assistance: $30,000 per 5 new jobs at$15/hr $150,000
Staff recommends that the TRF assistance be provided 50/50 by the City and Sherburne
County with the company receiving 100% of the annual TRF for a maximum period of up
to 10 years.
Classic Acrylics has submitted the City's TRF application and fee. Per the City's TRF policy,
any requests over the amount of$25,000 requires financial review and but-for analysis by the
City's financial advisor, Ehlers &Associates. The review and recommendation will be
completed prior to the Council calling a public hearing on the TRF request.
Actions Requested
Staff recommends the EDA consider the following actions for the Classic Acrylics project:
• Direct staff to complete the due diligence for the TRF process
• • Recommend that the City Council call a public hearing on the TRF assistance
request and business subsidy
•
• SITE PLAN
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For More Information Contact: MARTY FISHER i I y alLI
PREMIER COMMERCIAL PROPERTIES,INC. 11 1 I 11
• 6131 Highway 10 NW, Ramsey, MN 55303M
CUMEERriAL
PROPRTIES
763.862.2005 --
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