EDSR MEMORANDUM 02-09-1998 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
•
MEMORANDUM
TO: Economic Development Authority
ROM: Paul T. Steinman, Director of Economic
`' Development
DATE: February 4, 1998
SUBJECT: Agenda Memo for February 9, 1998,
Meeting
5. Tax Increment Financing Plan for Tax Increment Financing
District No. 18 (Morel!)
A worksession was held by the EDA on February 2, 1998, to discuss
and provide direction to staff on a variety of issues related to the
Morrell project. At that time, staff brought forward the Tax Increment
• Financing Plan and draft Development Agreement for discussion with
the EDA. The following directives regarding the provision of tax
increment assistance were provided at that meeting:
• $300,000 at 0 percent interest to be provided proportionately
in the years 2000-2008, ($33,333 per year).
• $50,000 to be provided as an up front incentive.
• Demolition and clearing of their current facility will be
completed by at least June 2000. The Development
Agreement will be brought forth for approval by the EDA in
March and by the Council on April 6, 1998 - at the time of
final approval of the Tax Increment Financing District.
Attached to this memo is the final Tax Increment Financing Plan for
Tax Increment Financing District No. 18 and the final schedule for
establishment of Tax Increment Financing District No. 18.
In summary, the Plan identifies that $350,000 total will be provided to
the Morrell project as an incentive to relocate from their current site
and to construct a new facility of approximately 45,000 square feet on
171st Avenue. Three hundred thousand dollars of this assistance will
• provided over time between the years 2000 and 2008 in semi annual
13065 Orono Parkway • P. O. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EDA Agenda Memo
February 4, 1998
Page 2
IIpayments from the Tax Increment Fund to the Morrells in
approximately July and December of each year in the amount of
$16,666.66. The specific dates of providing this assistance will be
finalized in a Tax Increment Revenue Note, the form of which will be
agreed to within the Development Agreement, and the Note itself will
be executed at the time of completion of their project on 171St, or
approximately January 1, 1999. Staff would propose that the $50,000
up front incentive be provided to the Morrells at the time of issuance of
their occupancy permit in their new facility. This provides the city
with the guarantee that the facility has already been constructed and
will generate tax revenues to repay the $50,000 up front assistance.
Recommendation
Staff recommends the following:
• Approve Resolution 98- a Resolution Modifying
Development District No. 1 and.Adopting the Development
Program Therefor; and Establishing Within.Development
District No. 1, Tax Increment Financing District No. 18, and
Adopting the Related Tax Increment Financing Plan
• Therefor.
6. Business Incubator Advisory Board Recommendations
The Business Incubator Advisory Board met on Wednesday, February
4, 1998, to hear presentations from two business incubator prospects
Protectorcare, Inc., and Watermark.
Protectorcare, Inc. Protectorcare manufactures, markets, and
distributes a product used as a half step stair assistance device. The
product is placed on stairs in residential homes to provide assistance
in walking up and down stairs. Protectorcare has manufactured
numerous units of this product and has already obtained significant
sales of the product. Protectorcare has been approved to receive a
$25,000 equity investment from the Anoka/Sherburne County Capital
Fund and is applying to receive a favorable response from the Central
Minnesota Initiative Fund's Seed Fund Program in the amount of
$25,000. The activities which Protectorcare will be undertaking in the
incubator will be primarily final product assembly. Other activities to
be undertaken will include warehousing, packaging,and distribution
Ai of the product. Staff is currently in the process of negotiating a
sublease for Protectorcare to occupy the incubator by the end of
EDA Agenda Memo
February 4, 1998
Page 3
II February 1998. The Incubator Advisory Board unanimously supported
a recommendation to,the EDA to proceed with entering into a sub-
lease with Protectorcare.
The details of the sublease as proposed to Protectorcare are as follows:
• Space to lease - 1,561 square feet.
• $10 per square foot total rent to be paid with$8 per square
foot of company stock and $2 per square foot cash.
• Term of lease will be from approximately the end of February
1998, to April 14, 1999 (April 14, 1999, is the date at which
the current lease between the EDA and Larry Hickman is
scheduled to end. Toward the end of 1998, the EDA needs to
decide whether to extend the term of its lease with Larry
Hickman.
• Term of the lease with Protectorcare may be extended if the
EDA extends its lease with Larry Hickman
Paul Probst, CEO of Protectorcare will be present at the meeting to
provide a short product presentation.
Staff Recommendation on Protectorcare
Staff recommends approval of execution of the attached Sublease and
Memorandum of Understanding with Protectorcare, Inc., for occupancy
of the Business Incubator facility.
Watermark - The Incubator Advisory Board also met with a company
called Watermark. This company currently manufactures and
distributes underwater video cameras used primarily by school
facilities as a training tool for swimmers. These underwater cameras
are attached to a pole which records videotape of swimmers from
under the water for use as an additional instructional tool.
Watermark has identified a new,product line using identical
technology in the fishing industry. The product is a video fish finder.
This company is currently waiting for a reply to a request for $25,000
from the Anoka/Sherburne County Capital Fund and an additional
$25,000 from the Central Minnesota Initiative Fund's Seed Fund
Program. The company has, at this point, not come far enough to
begin to negotiate a lease arrangement for incubator space. This may,
however, occur rather quickly as the company is in discussion with
potential partners on this project. Staff will keep the EDA updated as
• to this progress. The Incubator Advisory Board recommends that the
EDA and staff continue to work with Watermark and bring them back
EDA Agenda Memo
February 4, 1998
Page 4
• to the Incubator Advisory Board prior to finalizing a lease
arrangement.
7. Associated Builders Presentation of Formal Tax Increment
Application for Hohlen Property
Pat Pelstring, of Pelstring Capital Corporation, will be present at this
EDA meeting to present the formal Tax Increment Application
regarding the Hohlen project. Dave MacGillivray of Springsted will
also be present to aid the EDA in its discussion of the TIF Application.
Staff and Springsted will have a variety of research and analysis to
complete regarding the formal TIF Application. Staff proposes that
this be completed over the next two-three week period and that a
worksession be scheduled following that to discuss specifically the Tax
Increment District and industrial component issues.
There is no recommended actions on this issue at this time other than
to discuss the details of the Application with Associated Builders and
to plan a worksession on an appropriate date.
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