9.1. SR 08-17-2020
Request for Action
To Item Number
Mayor and City Council 9.1
Agenda Section Meeting Date Prepared by
Work Session August 17, 2020 Amanda Othoudt, EDD
Item Description Reviewed by
Shoot Steel Request for Tax Increment Cal Portner, City Administrator
Financing
Reviewed by
Action Requested
For discussion purposes only.
Background/Discussion
Shoot Steel, Inc. manufactures AR500 and AR550 steel targets, target stands, and other valuable range equipment.
They are currently operating out of their Ramsey, MN facility.
The EDA has received a purchase agreement for 17565 Tyler Street, NW from Shoot Steel who indicated their desire
for EDA incentives. They propose to purchase a 4.34-acre lot for the market rate of $2.00 per square foot, $378,100.
The purchase is contingent on the EDA holding a public hearing on September 21, 2020, and making the requisite
findings required by Minnesota Statutes Section 469.105, subdivision 2 that the sale and conveyance of the property
are in the best interests of the city and the transaction furthers the EDA’s general plan of economic development.
They propose to relocate 7 FT and 1 PT employees from their Ramsey location and hire 6-7FT employees over the
next two years. The positions will pay a minimum of $18 per hour depending on skill level.
Shoot Steel is requesting up to $400,000 in financial assistance from the city in the form of Tax Increment Financing
to construct their new facility. The maximum term for an Economic Development TIF district is nine years. The
applicant must meet the public purpose objectives and policy statements to qualify. Although not statutorily required,
each project is required to meet the “but-for” test to determine the need for and level of assistance.
Staff is seeking direction from Council on their interest to entertain a TIF application from Shoot Steel, Inc.
Financial Impact
N/A
Mission/Policy/Goal
The City of Elk River shall utilize TIF to encourage desirable development or redevelopment that would not
otherwise occur but for TIF.
Attachments
Shoot Steel Summary
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity.
Updated: August 2020
City of Elk River Tiff Committee,
IźƭƷƚƩǤ ƚŅ {ŷƚƚƷ {ƷĻĻƌ Lb/͵ʹ
Shoot Steel, INC began as Multiplex Systems LLC in 2009. Initial products were firearm cartridge
reloading supplies and cardboard target stands that I designed and built. The first steel targets were cut
in 2010. In 2014 the company name was changed to Shoot Steel INC. to match the brand that was
created around 2011. Annual sales have been around $2.4 million for the last several years. Business
has been steady through two of the worst recessions in US history. In fact, we are thriving during the
Covid pandemic. Sales have never been higher.
Spring of 2020 I hired a VP the help run the company and keep projects moving forward. Having a VP on
staff will help promote growth in the years to come. I am committed to adding staff as needed to grow
the business. In addition to hiring new staff; I am committed to support ongoing training and education
for current employees. This allows them to grow within the company, increasing salaries while adding
to the employees resume for future employment should they chose to leave.
.ǒźƌķźƓŭ 5ĻƭźŭƓʹ
The phase one building will be approximately 20,000sf with a small office space. Some of the office will
be to support the warehouse and some will be for sales and management.
The building will be of precast concrete construction. Due to the location the city is asking that the
building have two improved front faces or sides, which will add considerable cost to the project.
Additionally, a pond will be required on the site adding more cost to the project. Due to the existing
grade at this site the pond must be in a less than ideal location, again adding cost. The new pond
location will push the building further into the lot, towards Twin Lakes Rd and away from our utilities
th
connection on 175 Ave. This significant shift to the east will add significant construction costs.
WƚĬ /ƩĻğƷźƚƓʹ
Shoot Steel, INC currently employs 7 full time and one part time employee. I plan to move 2 full time
employees from another one of my companies to Shoot Steel, INC in the next year. This transition will
streamline business operations and reduce costs.
Hiring for 2020: I plan to hire a shop manager and controller at $70,000/year for each position. I also
plan to hire 2-3 additional warehouse employees at $18 per hour starting pay. All full time employees
receive medical benefits and PTO.
2021 and Beyond: I plan to hire 2-3 employees per year at $18 per hour or higher. Some positions may
pay higher depending on the required skill level. For example: a laser operator would be paid around
$30 per hour.
{ƚǒƩĭĻƭʹ
The budget for the project is set at $2.4 million with a max budget of $2.55 million. My father has
committed $200,000 to the project as a gift. I plan on contributing $50-70k as a down payment towards
the project. Village Bank and the SBA will provide loans for the balance, at very competitive rates.
The project is currently $400,000 over budget. I am working with the contractor to reduce costs. The
bank and my contractor are both urging me to apply for TIFF to keep the project on budget. As it is
currently planned, I will not be able to build in Elk River. Unless something changes; I must consider
building in a city that offers more financial incentives to bring in new businesses.