EDSR MEMORANDUM 05-08-2000 • MEMORANDUM
TO: Economic Development Authority
FROM: Marc Nevinski, Acting Director of
.41°
11/0VEconomic Development
DATE: May 8, 2000
SUBJECT: EDA Meeting Agenda
5. Consider Request for Tax Rebate Financing—John Weicht, R&W
Associates
Issue
At its April 10 meeting the EDA considered a request by John Weicht of
R&W Associates to use tax rebate financing (TRF) in the construction an
18,000 s.f. multi-tenant industrial building in the McChesney Industrial
Park. Several questions arose which required further clarification by Mr.
Weicht, who was unable to attend the meeting, and the issue was tabled
until he could be present. The primary issue focused on the project's
return on investment in the "but-for" analysis.
Background
Recently, John Weicht and Mark Rothfork formed R&W Enterprises in
order to construct a multi-tenant industrial building on the last lot in the
McChesney Industrial Park. The building will be designed to house
approximately three to four light industrial companies. Additionally, the
site plan, which has been approved by the planning commission, combines
the parking area with the existing parking at Mark Rothfork's building
(see attached site plan), which subsequently increases the size of the
building on the site.
The total cost of the project is projected to be approximately $758,000.
Sources of financing include a $630,000 loan from The Bank of Elk River
and a $128,000 equity contribution by R&W Enterprises.
Mr. Weicht is requesting that the city rebate its portion of the taxes on the
building for a period of four years. Staff has estimated this amount to be
$6,159 per year or $24,683 over the term of the rebate period. Mr. Weicht
also intends to request that Sherburne County rebate its portion of the
taxes on the project for the same four year period. The county's portion is
estimated to be $6,412 per year or $25,649 over the four year period, and
• would bring the total rebate amount to approximately $50,000. If
approved, the rebate would commence with taxes payable in 2002 and end
with taxes payable in 2006.
Upon receipt of Mr. Weicht's tax rebate financing application, staff
completed the ratings worksheet used to help analyze such proposals. The
proposed project scored a "33", which equates to a "moderately desirable"
project. Staff frequently receives inquires for the type of space Mr. Weicht
is proposing to construct. Subsequently, although no tenants have, as yet,
committed to the space, it is likely that the building will lease quickly.
Action Requested
Staff recommends that the EDA consider Mr. Weicht's request for a four
year tax rebate period beginning with taxes payable in 2002. If the EDA
approves the project, its recommendation will be sent to the City Council
for a public hearing and final approval on May 22, 2000.
Attachments
• Tax Rebate Financing Application
i. But-For analysis — Exhibit D
ii. Site Plan
iii. Project and Company Narratives — Exhibit B
• Staffs Tax Rebate Financing Projection Worksheet
• Letter of Commitment from The Bank of Elk River
6. Discuss Jackson & Main Site
See attached memo from Executive Director Pat Klaers.
7. Update of Economic Development Director Interviews
Executive Director Pat Klaers will update the EDA on the Economic
Development Director Interviews.
8. Other Business
• Staff will provide a brief update of activity at the incubator.
9. Consider Offer to Settle of Northstar Die Casting Lawsuit
• Executive Session of EDA to Discuss Pending Litigation Regarding the
Northstar Die Casting Lawsuit
•