EDSR MEMORANDUM 03-13-2000 --fir —�
ity of � MEMORANDUM
AkRiverTO,\, - •
Economic Development Authority
FROM: Marc Nevinski, Acting Director of
liK/ Economic Development
DATE: March 13, 2000
SUBJECT: Meeting Agenda
5. Micro Loan Application—Mark Rothfork, Ultra Image Powder Coating
On March 1, 2000 the Finance Committee, after reviewing his application,
unanimously recommended to award Mark Rothfork of Ultra Image Powder
Coating, a $50,000 Supplemental Micro Loan. The loan will be used for an
expansion to Mr. Rothfork's existing building in the McChesney Industrial
Park and will house an automated painting conveyor system. The loan is
proposed to be structured as a participation loan with First National Bank of
Elk River. Mr. Rothfork will be available to discuss his proposed project and
III
answer questions. Attached is staffs memo to the Finance Committee and the
Micro Loan application.
Action Requested
Consider approval of a $50,000 Supplemental Micro Loan to Ultra Image
Powder Coating.
6. Public Hearing— Consider Modifications to the Tax Increment
Financing Policy
The new state statues regarding business subsidies mandates that cities
modify their current incentive and subsidy policies to include provisions
stipulated by the business subsidy law. The law also requires that the city
hold a public hearing on such modified policies before providing subsidies.
The primary modification to the tax increment financing policy includes the
addition of a ratings scale for various project applicants. Such a ratings scale
will enable staff, as well as the HRA, EDA, and City Council, to better
analyze a given project for its eligibility to utilize TIF. Staff presents this
ratings scale under the assumption that every project that requests TIF may
not necessarily qualify for it under these guidelines. For applicants who do
not qualify based upon the rating method, tax abatement may be a potential
financing alternative.
0
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • TDD &Phone: (612)441-7420 • Fax: (612)441-7425
• At its last meeting, the EDA reviewed a draft of the proposed policy
modifications, provided comments and recommendations on the policy, and
directed staff to complete the modifications for a public hearing and final
approval.
Action Requested
Staff recommends that the EDA consider any input provided at the public
hearing and then adopt the revised tax increment financing policies.
7. Tax Abatement (Tax Rebate Financing) Policy
As directed by the EDA at the March 13 meeting, staff has completed a
draft of a tax abatement policy. As you will recall from past discussions of
this new development tool, tax abatement differs from TIF in that each
political body is given the option to "abate" its portion of the project's
property taxes. Generally, this will result in less dollars being generated
for the project than with TIF, although abatement is easier and less costly
to administer.
The tax abatement policies that staff has drafted are very similar to the
recently revised TIF policy. The tax abatement policy emphasizes
industrial development and includes a ratings worksheet to aid in analysis
of proposals. The primary difference between the two policies is that no
• minimum threshold for building value or size is stipulated in the tax
abatement policy. This is due to the fact that the smaller amount of dollars
generated with tax abatement, combined with less administrative time and
costs, will make tax abatement more appropriate for smaller scale projects.
It should also be noted that staff is proposing that tax abatement be
referred to as Tax Rebate Financing (TRF), which more accurately reflects
how the tool functions. Sherburne County, which is also drafting a tax
abatement policy, is considering a similar name modification to avoid
confusing the tool with other, more established forms of tax abatement.
Requested Action
No action is requested at this time. However, staff asks that the EDA
review the proposed draft of the tax abatement policy and provide
feedback.
8. Incubator Update
Staff will provide a verbal update of recent interest in the business
incubator. Further discussion on the incubator is planned for the April
EDA meeting.
•