5.2. SR 05-08-1995ITEM 5.2,
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MEMORANDUM
TO: Mayor & City G`ouncil
FROM: William, Rubin, EDA Executive Directo ~-
DATE:: May 8, 1995
SUBJECT: Consider a Request for a Fublic
Hearing to Establish a New Tax
Increment Financing District
Introduction
At its May 8 meeting, the Elk River City Council will be asked to schedule a
public hearing to consider a Tax Increment Financing Plan for the creation. of
anew Tax Increment Financing District. A public hearing to consider the -
Tax Increment Financing Plan is requested for: June 19, 1995.
Background
The request for tax increment assistance comes from Neos, Inc., 19727
Meadowvale .Road. Mr. Jack T. Mowry is president. of Neos; .Inc, He is also
the owner of Metal -Craft Machine and Engineering, also located at the same
address. Neos seeks $80,000 in'tax increment financing assistance to support
its proposed 12,000 square foot facility on two vacant lots in the 1VIcChesney_
Industrial Park. Tax increment funds would be used to "write down" he cost
of the land and for general site development and site preparation costs
associated with this project.
At this writing; a 12;000 square foot facility, constructed of pre-cast tip-up _
panels,.. or cement block construction, is anticipated. Neos, Inc., would-occupy
approximately 3,600 square feet of space within the new facility. Additional
space would be available for long-term lease to small industrial companies:
Neos de-signs and builds machinery - .specializing in packaging machinery.
Fiveexistng jobs would be retained as a resultof this expansion, and, six
new jobs would be created by Neos: In addition, prospective tenants wfluld '
likely retain another eleven jobs and create ten new: ones. The project cost of
this expansion is estimated at $460,000. The land and building would likely
have a finished market value of $550,000:
P:O. Box 490 •:13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (b12) 441-7425
Equal .Opportunity Housing and Equal Opportunity Employment
The TIF-.request will be considered by the Elk River Economic Development
Authorty'at its May, 8 meeting. The EDA is expected to authorize the
preparation of a Tax Increment Financing Plan- and will likely recommend'
than the City Council schedule a public hearing on this matter:.
The-:EDA is proposing the construction of a "Economic Development TIF
District". These Districts are .designed to last a short period of time: Because
of legislation approved in 1990, it is expected that the city will ose>a portion
of its state aid as a consequence of setting up a new TIF District. However;
at an EDA workshop in January, those present considered the .long-term
benefits of new TIF Districts. It was agreed that future requests for TIF
assistance would be evaluated on a-case by case basis:. Criteria for
establishing new TIF Districts. included the type of user, jobs created or
retained, and the finished :product.
Below is a proposed timetable to complete Neos' request for TIF assistance:
May 8 - City Council sets public hearing date to consider TIF Plan.
Mid May - TIF Plan is.sent to School District and County.-Board fQr review
and'commerit.
May 16 - County Board meeting.
May 23 - School Board meeting.
May 23 - Planning Commission reviews TIF Plan.
May 31 - EDA TIF hearing notice published in the Star News;
City Council TIF hearing notice published in .the Star News;
June 12 = EDA conducts public hearing-and adopts TIF Plan;
June,19 - City Council conducts public hearing on TIF Plan. "
Action Requested
The Elk River City Council is asked to schedule a public. hearing-for. June 19,
1995, to consider a Tax Increment Financing Plan for a new Tax Increment
Financing District:
MAY- 4-95 THU 931 METAL CRAFT FAX N0. 4410798 P, 02
y 12797 Meadowvaie RoadSuite 8 • Elk River, MN 55330
(612) 441-0705 • 1-500-848-4912 ext. 2958
~Y
el ~ „ ii
Dear Bill,
We are looking at building a 12,000 square foot building used for manufacturing and
office space. Our current plans are for Tip-up concrete panels, or cement block construction. We
are trying to lay out the building to accommodate various other business renters as well as
planned growth for Neos. Any suggestions you have would be greatly appreciated. Thank you for
your help.
Sincerely,
Cite
Jack T. Mowry
r~
U
MAY- 4-95 THU 9.32
APPLICANT
METAL CRAFT
FAX N0. 4410798
APPLICATION FOR TAX INCREMENT FINANCING
CITY OF ELK RIVER, NIINNESOTA
Business Name: Neos Incorporated
2797 Meadowvale Road
Elk River, MN. 55330
Phone: 612-441-0705
Officers: Jack T. Mowry, President
Gregory E. Erlandson, General Manager
Kathy Eckert, Corporate Secretary
Contact Person: Jack T. Mowry
Title: President
Business Form: Corporation
Years in Operation: 8 years
• Applicant has never filed for bankruptcy.
Applicant has never defaulted on any bond or mortgage commitment.
Applicant does have commitments for conventional financing.
Financing References:
P, 03
Bank: J.E. Braas Company Industrial Supply Company
First National Bank Of Eik River 7970 Wallace Road 12905 Hiway 55 West
736 Main Street Eden Prairie,MN.55344 Minneapolis,MN.
.Elk River, MN. 55330 612-937-8902 612-559-0033
612-441-2100
Combined Welding & Mach. Power/Mation
Officer: Tom McNair 5873 Queens Ave. N/W-8330 P.O.Box 1450
Elk River, MN. 55330 Minneapotis,MN. 55485
612-241-0685 612-645-0781
Accountant: Legal Counsel:
Hubmer and Enstad, Ltd. Lindquist and Vennum
• Jon Enstad, CPA Jim Rueter
8960 Springbrook Drive 4200 IDS Tower
Coon Rapids, MN. 55433 Minneapolis, MN. 55402
612-786-7899 612-371-3519
MAY- 4-95 THU 9.33 METAL CRAFT FAX N0. 4410798 P, 05
• PROPOSED PROJECT
Describe Project: To build a manufacturing plant/office building with approximately
12,000 square feet. Neos Inc. will require 4800 square feet now, and approximately 3000 more in
the next twa years. Metal Craft also needs expansion room and will take over the existing area
rented by Neos now. It is far more cost effective to build a larger building now and rent the space
until needed by Neos, or Metal Craft.
Location: Lot 6 and 7 of McChesneys Industrial Park.
Type of Project: Industrial
JOB CREATION
Current Number of employees
Current Payroll
Number of Jobs Created
• Number of Jobs Retained
Revised Payroll
PROJECT CQ~T~
NEOS PROSPECTIVE TENANTS
3 full time, 2 part time 11 full time
$120,000.00 $360,000.00
6 10
5 I1
$240,000.00 $690,000.00
Land Acquisition: $60,000.00
Site Development: $20,000.00 Estimate
Construction: $380,000.00 Estimate
Machinery and Equipment:
Architectural and Eng.. Fees:
Legal Fees:
Interest During Construction:
Debt Service Reserve:
Contingencies
Total: $4b0,000.00
SOURCE OF FINANCING
Conventional Loan $300,000.00
Equity ~(~ w00.oo
SBA Loan
Revenue Bond
Tax Increment Financing $80,000.00 Estimate
Grant(s)
Other
Total $ ~ ~~ ~ ~~
MRY- 4-95 THU 932 METRL CRRFT
CONSTRUCTION AND DESIGN
Name and Address of Architect
Name and address of Engineer
Name and address of Contractor
FRX N0. 4410798
Target Dates:
•
Start of construction: ASAP
Construction completed: 12•?~+. qrj
Finished Market Value: $550,000.00 approximately
STATEMENT OF PUBLIC PURPOSE:
P, 04
Tax increment funds are needed to reduce overall project cost to assure that Neos remains
a stable and profitable company through it's initial building stage.
The undersigned, Jack T. Mowry, President of Neos Incorporated, hereby represents and
warrants to the City that he has carefully reviewed this application, and that the statements and
information contained herein and submitted herewith are accurate and complete to the best of his
knowledge and belief.
Dated: May 4, 1995 Neos, Incorporated
By \~ ~ -~
President c~~
The City reserves the right to require additional information and supporting data from the
applicant after the filing of this Application.
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MAY- 4-95 TNU 9:34 METAL CRAFT
cRASs
GRASS
GRASS
COPT PLAN •
12,000 SQ FT FACILITY
NEOS, INC
fAX N0. 4410798 P. O6 MAY- 4-95 TNU 9:35 METAL CRAfT FAX N0. 4410798
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