6. HRSR 01-03-2006ITEM # 6.
city
E
liver
MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Catherine Mehelich, Director of Economic Development
Scott Clark, Community Development Director
DATE: January 3, 2006
SUBJECT: Consider Tax Rebate Financing Application for The Bank of Elk
River Expansion
Attachments
• Tax Rebate Financing Application -The Bank of Elk River
• City of Elk River Tax Rebate Financing Policy
• Staff Correspondence to Pat Dwyer, The Bank of Elk River dated April 11, 2005
• July 11, 2005 City Council Meeting Minutes
• Tax Rebate Financing Review Worksheet
• Letter from Sherburne County Assessor dated December 28, 2005
• Abatement Fact Sheet -Ehlers & Associates, Inc.
Issue
The attached application for Tax Rebate Financing (TRF), or abatement, has been submitted
by The Bank of Elk River. The Bank is requesting TRF assistance for the expansion of
20,000 square feet to their existing facility downtown. Specifically, the applicant is
requesting the City rebate up to $300,000 of its portion of the new property taxes generated
from the project, and the County rebate a matching share for a combined total of $600,000.
Normally the City has provided tax abatement to manufacturing businesses. Under the
City's attached TRF Policy Section V. Project Qualifications "commercial redevelopment or
rehabilitation" proposals can be considered for the use of TRF. It is appropriate for the
HRA to review and provide recommendation to the City Council of this request since the
project involves significant redevelopment in the downtown area.
Background
Earlier in 2005 staff was notified by representatives of The Bank of Elk River about
preliminary discussions to expand the Bank's corporate offices to accommodate an
additiona120,000 square feet for current and future growth of the company. The Bank had
Consider Tax Rebate Financing for The Bank of Elk River Expansion Project
January 3, 2006 HRA Meeting
Page 2 of 4
been evaluating the pros and cons of either expanding its corporate office facility located
downtown, or to relocate its corporate offices to its commercial location in Otsego.
In response to The Bank's financial challenge, staff provided The Bank with the attached
correspondence dated April 11, 2005 offering a recommendation for the City's consideration
of TRF for the proposed expansion project using the tax revenues derived from the
increased market value as a result of the expansion for a maximum period of 10-years. Staff
estimated that depending on the increased market value that a range of $410,000 - $559,000
could be generated by the City and County combined over a 10-year period.
At its July 11, 2005 work session the Council discussed The Bank's challenges to expanding
downtown. As stated in the attached meeting minutes, the Council indicated support for the
use of TRF for the proposed project. In addition, the Council indicated that the expansion
project, and future expansions, of The Bank would not be denied by the Council based on a
lack of parking.
Analysis
Since the HRA normally does not review TRF requests, attached is an Abatement fact sheet,
defining Abatement and summarizing its statutory history.
No But For Anal
The Bank is requesting that the City rebate its portion of the property taxes up to $300,000,
along with a matching amount from Sherburne County, for a total of $600,000. Normally a
financial but for analysis would be completed to determine the amount of public assistance
necessary for the project to proceed but this TRF application is being processed under the
premise that The Bank is incurring substantial additional construction costs by converting
the existing facility. This project meets all of the commercial redevelopment objectives
found in Section III of the City's TRF Policy.
Specifically, found in Section I of the City's TRF policy, it states that "The fundamental
purpose of tax rebate financing in Elk River is to encourage desirable development or
redevelopment that would not otherwise occur but for the assistance provided through TRF."
Additional Construction Costs
On page five of The Bank's attached TRF application, the contractor estimates that
significantly more costs, approximately $940,000, will be incurred to remodel and expand the
existing structure as compared to building a similar size structure on the Otsego property.
The Bank has stated that without tax rebate the project would be built in Otsego.
Functionally, maintaining adequate parking and drive thru access is a challenge due to the
shape and size of the lot. In addition, an expansion to the downtown facility presents an
opportunity for additional revitalization in the downtown through private investment and
expands the downtown employment and customer base which will support small businesses
in the central business district.
The Application
The Bank has submitted a complete application to the City for Tax Rebate Financing. Staff
has evaluated the application based on the City's attached TRF Proposal Review Worksheet
S:\EDA\TAXABATE\Bank of Elk River\Memos\1.3.06 HRA.doc
Consider Tax Rcbatc Financing for'Phe Bank of Elk River Expansion Project
January 3, 2006 I IRA Meeting
Page 3 of 4
to measure the strength of the project against the city's goals and objectives for the use of
TRF. The project scored 44 out of 50 possible points, which equates to a "highly desirable"
project.
Sherburne County Assessor's Review
The Sherburne County Assessor's office has recently reviewed the building plans for the
proposed expansion. Per the attached letter, the Assessor's office has estimated the total
project market value upon completion to be $4,539,600. The estimated increase in market
value as a result of the expansion project is $2,932,900. The following table indicates the
breakdown between existing and new estimated market value as a result of the project:
Existing New Estimated Total Estimated
Market Value Market Value Market Value
Market Value $1,606,700 $2,932,900 $4,539,600
Total Tax Payable $58,648 $109,505 $168,153
Annual City Portion $12,000 $27,400 $39,400
Annual County Portion $12,000 $27,000 $39,000
Tob and Wage Goals
The Minnesota Business Subsidy Law requires projects which receive over $25,000 of public
financing assistance to meet job and wage goals as established by the city. A requirement of
the financing assistance to The Bank will include a commitment for the creation of 20 new
full-time positions as a result of the expansion project at a minimum hourly wage of $15.00
within two years of project completion.
Requested Action
Staff is of the opinion that there are three options for consideration of providing TRF for
the proposed project. The HRA is considering a recommendation to the City Council for
the City's TRF portion, which is $300,000 of the total $600,000 request.
1. Recommend the Council approve providing up to $300,000 based on 100% of
the city's annual portion of tax revenue generated from the property (both
existing and new market value). This option would extinguish the obligation
over a period of approximately 8 years. The concern with this option is that the
City's general fund would not annually receive the $12,000 of existing value.
2. Recommend the Council approve providing up to $300,000 of TRF based on all
of the new market value and some portion of the existing value in order to keep
the term at a maximum period of 10-years.
3. Recommend the Council approve providing up to $300,000 of TRF based on
only the new market value. This option would require the city to extend the
term of the abatement up to 12 years in order to reach the full amount of
assistance, but would allow the city to retain the existing tax base.
S:\EDA\TAXABATE\Bank of Elk River\Memos\1.3.06 HRA.doc
Consider "1'ax Rebate Financing for The Bank of Elk River Expansion Project
~anuary 3, 2006 I I12A Meeting
Page 4 of 4
Staff recommendation
Staff recommends that the HRA consider Option 3 and a requirement that The Bank of Elk
River create 20 new full-time positions as a result of the expansion project at a minimum
hourly wage of $15.00 within two years of project completion.
Next Step
Following the HRA's recommendation a City Council public hearing will be scheduled, as
required by statutes, to consider providing tax abatement and business subsidy to The Bank
of Elk River expansion project.
S:\ED~1\TAX.~BATE\Bank of Elk River\Memos\1.3.06 HRrl.doc
VIII. APPLICATION FOR TAX REBATE FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership The Bank of Elk River
Address 630 Main St.
Primary Contact _LeRoy Lindenfelser
Address
same
Phone 763-241-8507 Fax 763-441-0847 Email llindenfelser@thebankofelkriver.com
On a separate sheet, please provide the following:
• Brief description of the corporation partnership's business, including history, principal
product or service, etc... Attach as Exhibit A .
• Brief description of the proposed project. Attach as Exhibit B.
• List names of officers and shareholders/partners with more than five percent (5%)
interest in the corporation/partnership. Attach as Exhibit C.
• Abut-for analysis and narrative. Attach as Exhibit D.
Attorney Name _Ed Drenttel, Winthrop and Weinstine
Address 225 S 6th St, Suite 3500, Minneapolis, MN 55402
Phone 612-604-6675 Fax 612-604-6800 Email edrenttel@winthrop.com
Accountant Name Bob Etter, CPA Wolf Etter & Co.
Address 8 West Main St, Madelia, MN 56062
Phone 507-642-8882 Fax 507-642-3127 Email better(a~wolfetter.com
Contractor Name Jack Holmes Vanman Architects and Builders Inc.
Address 669 Winnetka Ave N, Golden Valley, MN 55427
Phone 763-541-9552 Fax 763-541-9857 Email iack(a,vanmanab.com
Engineer Name same
Address
Phone Fax Email
Architect Name Rick Keillor. Vanman Architects and Builders. Inc.
Address same
Phone same Fax same Email rick(a,vanmanab.com
f
B. PROJECT INFORMATION
1. The project will be:
Industrial: New Construction _XX_ Expansion Redevelopment /Rehab.
Office/research facility that conforms to business park standards
XX Commercial Redevelopment/Rehabilitation
2. In addition to the City of Elk River, applicant is requesting TRF funds from:
_XX~ Sherburne County _ School District 728
3. The project will be: _XX_Owner Occupied Leased Space
• If leased space, please attach a list names and addresses of future lessees and indicate
the status of commitments or lease agreements. Attach as Exhibit E.
4. Project Address 630 Main St Elk River, MN 55330
• Include Legal Description and PID Number. Attach as Exhibit F
5. Site Plan Attached: XX Yes No
6. Total Amount of TRF Requested: $600,000_over 10 years.
City Portion of TRF: Annual $30,000 Total $300,000
County Portion of TRF: Annual $30.000 Total $ 300,000
ISD 728 Portion of TRF: Annual $ Total $
7. Current Real Estate Taxes on Project Site: $ 62,440.92
Estimated Real Estate Taxes upon Completion: Phase I $
Phase II $
8. Construction Start Date:
Construction Completion Date:
If Phased Project:
_April, 2006
_April, 2007
Year % Completed
Year % Completed
C. PUBLIC PURPOSE
It is the policy of the City of Elk River that the use of Tax Rebate Financing should result in
a benefit to the public. Please indicate how this project will serve a public purpose.
_XX Job Creation/Retention Number of jobs retained 68
Number of jobs created by project 20 - 30
Average hourly wage of jobs created/retained $18.00
New industrial development which will result in additional private
investment in the area.
XX Enhancement and/or diversification of the city's economic base.
_XX_The project contributes to the fulfillment of the City's Strategic
Plan for Economic Development.
Removal of blight.
_XX_Rehabilitation of a high profile or priority site.
_XX_Other: Retain 65 jobs in Elk River
D. SOURCES & USES
SOURCES NAME AMOUNT
Bank Loan $
Other Private Funds $
Equity $3,500,000
Fed Grant/Loan $
State Grant/Loan $
EDA Micro Loan $
Tax Rebate Financing $ 600,000
ID Bonds $
TOTAL $
USES AMOUNT
Land Acquisition $
Site Development $
Construction $4,100,000
Machinery & Equipment $
Architectural & Engineering Fees $
Legal Fees $
Interest During Construction $
Debt Service Reserve $
Contingencies $
TOTAL $
3
Exhibit A:
The Bank of Elk River was established in 1885 as a partnership between Charles M. Babcock,
Houlton and Henry Castle. It was incorporated as a State Bank in 1902.
The bank was originally located north of the railroad tracks at the northwest corner of Jackson and
Railroad Drive. That building was consumed in the great fire of 1898 that destroyed almost all of
Elk River's business district. Anew building was built on Jackson, but it also burned down and had
to be reconstructed. That building, at 315 Jackson, served the bank until 1976 when our current
building was built on Main Street.
Over the years the bank purchased and removed all of the buildings between Jackson Place and the
intersection of Highway 10 and Main Street. Two additions were made to the Main Street location
to accommodate growth.
The Bank of Elk River continues to provide a full line of deposit and loan products to consumers
and businesses.
With deposits increasing from $153,000 in 1909, to $302 million today, the Bank of Elk River has
grown to be the largest bank in Elk River and is in the top-20 banks in the Twin Cities metropolitan
area.
Exhibit B:
A 22,000 square foot, two-story addition will be built along Main Street at an estimated cost of $4.1
million. The addition will be constructed to add a third floor in the future.
Extensive remodeling will be done to the current building.
Exhibit C:
100% of the stock of The Bank of Elk River is owned by Metro North Bancshares, Inc.
Exhibit D:
But for analysis.
To be provided later if necessary.
Narrative.
Exhibit D
This addition will cost us significantly more than building a similar size structure on our Otsego
property. We estimate this figure to be $940,000. Without tax abatement the project will be built
in Otsego.
`7
Extra costs:
Construction on a confined site $100,000*
Remodeling costs for present space 250,000*
Roof work on present building for snow loads 90,000*
Additional architectural detail 200,000*
Construction of an employee parking lot across Hwy 10 300,000
(land acquisition, demolition, curb, asphalt
and landscaping)
Total 940 000
* from Richard Keillor, architect, Vanman Companies.
Exhibit E:
N/A
Exhibit F:
Bank Building at 630 Main St.
Parcel Number: 75-405-0340
Legal Description: LOTS 2, 3, 4 & W 111 FT OF LOT 5, BLK 3
Plat: 405 -VILLAGE (ELK RIVER)
Parcel Number: 75-405-0320
Legal Description: LOT 1, BLK 3
Plat: 405 -VILLAGE (ELK RIVER)
Parking lot at the NW corner of Hwy 10 and Main
Parcel Number: 75-405-2410
Legal Description: LOT 3, BLK 24
Plat: 405 -VILLAGE (ELK RIVER)
E. ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
XX_ A) Written business plan, including a description of the business,
ownership/management, date established, products and services, and future
plans
_XX_ B) Financial Statements for Past Two Years
_XX Profit & Loss Statement
XX Balance Sheet
N/A_ C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
_XX_ D) Two Year Financial Projections
_N/A F) Personal Financial Statements of all Major Shareholders
Profit & Loss
Current Tax Return
N/AG) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
N/A_ H) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in the Project
_XX I) Application fee of $5000
Not yet available J) Itemized Project Construction Statement
_XX K) Attach the following documentation as Exhibits
X Exhibit A - Corporation/Partnership Description
X Exhibit B - Description of Project
X Exhibit C - List of Shareholders/Partners
N/A_ Exhibit D -But-For Analysis
N/A_ Exhibit E - List of Prospective Lessees
X Exhibit F - Legal Description
Note: All Major shareholders will be required to sign personal guarantees if up front financing of
the project is required.
The undersigned certifies that all information provided in this application is true and correct to the
best of the undersigned's knowledge. The undersigned authorizes the City of Elk River to check
credit references, verify financial and other information, and share this information with other
political subdivisions as needed. The undersigned also agrees to provide any additional information
as maybe requ~,stec~-ley the City after the filing of this application.
Applicant N
Map Output
Page 1 of 1
ArcIMS HTML Viewer Ma
x
II
,,~ ~s.~~sat~€~~ I
t
``
~-.~s
,~ ``~-n~_
~
-
Legend
°
~ y
~
..,~T~ ~
tow~h~s
~.. ~ 1
T5-405~34fl ~ Pmts
M~ get
e,.,~~
Q lift
Disclaimer: Every attempt has been made to ensure that the information contained on this web site is valid at the time of publication. Sherburne
County reserves the right to make additions, changes, or corrections at any time and without notice. Additionally, Sherburne County disclaims
any and all liability for damages incurred directly or indirectly as a result of errors, omissions or discrepancies and is not responsible for misuse
or misinterpretation. Data is updated periodically. For the most current information contact the appropriate county department.
Contacts:
For questions about valuation or classification contact:
Assessors Dept. • assessor~co.sherburne,mn,us • phone (763) 241-2880
For questions about taxes due contact:
Auditor/Treasurer • auditor{d~co.sherburne.mn,us • phone (763) 241-2590
For address or mapping questions contact:
Public Works Dept. • gis@co _sherbume,mn,us • phone (763) 241-7000
For questions on, or to request a copy of, the last recorded deed contact:
Recorder • rec_or_der@cosherburne.mn.u§ • phone (763) 241-2915
http://www.Sherburne.mn.promap.com/servlet/com.esri.esrimap.Esrimap?ServiceName=... 11 /28/2005
(_
v
m
.Z)
r
m
r
T
O
z
r ,,ff----~~,
m V i- 4 ~ i; ii i~ 4 ~~-~ { '4'~ i
T 1. I
l II o i I I j I
3~ ~
dk j_~~,;.. ~4~,C i
1, yEw-,- r 1~ $1r 7 r i n
tl _J_v _.._1~. .J
I
~.p'
i
q i I ~ _ _ _
i i I-~"~ ~ "~ ~I i t I i i~ ~ Y
b --ff- -# i ~ '~
p' ~ r~
1
.~~i 1 -i,.A LJ~~
4 A
A~~~ ~ "' u M I ~o , di ~i p_
~~: ~~ rQl. V1 zA 'I
°'a ~ ~ ~ ~ ~ I ' g ,-
~~
~,
m. ~,
_ -~~ ,'
h
M//
~° ~~
;;~
I S pl,~ ._~ ,~i..
. ~
L
~ ~r
~~,
I
~~_ 4 ~~
Y `.. G rl~
~ g ~l{ h
# ~ 1 i ('~-mil C q..
l1 ,~
p~~ _ l~°~-< I
OOOOOOOOOOOOOOOOOm m'm
i i i i I i i i i I i i i ~ i i~ oSc ~~ 5~
z °~~ s~ ~~ m
~~~ ~~ ~~
~: z
~~8 >^ ~
~~
ADDITION AND REMODEL FOR: n'TE: ' MnEBr CMn iwT Txs
,,,,,~ TM,„Er~:~°_ VANMAN Architects and Builders
BANK OF ELK RIVER UPPER LEVEL "°"'°~ °"`°'"E° ° "`
p DOWNTOWN HEADQUARTERS FLOOR PLAN REGiSTE~[O .ncwT n ,1 mvwltNErEAnv[x~[try En~l, st" n
urgln [ uw5 O° rwE MINNEAPOLIS. MN 554?]
STnTE Or ESOTA.
IV 630 Main SUeet ,„n~,t;: ;'= `
W Elk River, Mlnnewla 55330 TE. iaxa.
.~o, M1~ ~, oeess e~oseuulw •la~la >lia N
.~.N.~,~.... L3Ntl3.LNl
~/g
/
/ leeng uieW OE9 N
LSNM1-IfsY~L Xtli ~ii6-llS-f9L y
~ 'tl1053NNIW !0 31V15
/
/
q//- 3NL f0 s+~n 3N1 Y30Nn
LibSS NW'SIlOAtl7NNIW
031iNObv G3tl3LSMJ3Y
NVId ~IOOId
S213121V(104tl3H NMO1NM04
~
~
~
Oli'3151LLM1M {IIN3AY tl313NNIM EW %/ ,
spa m ue sl~al~ ai vn + W, I L»Y a. wsY ib
4 tl NVWAIVA "'"~ °""° "" "'°'" "°
fl
13A31 NI`dW a3nla ~~3 do ~NVa ~
P
PI. :ilOj 1300W3tl ONtl NIOIIN]OV
~ g~~
fA ~~~
F- e® ~R~
Z `L ~ ~~~ ~
J~~~ ~'~
~ ~~ S¢g¢`~ Z
w wdti ~~ U~ W! i I I I I I i, ! I i I I I I I I
C7: m ~ Y00000000000000000
~, '.
I
',
~_ I ~I,
l
~~ ~~ ~~ ~ ~~ I~ I
~ M.
'__..~.,
x
~~ ,
I~
I
I
,
~ ~~~
~
~~~ no
~ ~ '1,~
t ~
}~;
her
ts ~
I v__~ ,
~ - i ,_
a ~
a~ ~2
S ~
I T
/
.
~
~~
P
~
r
Wycrl /
^~
~~
+ ~
4~ ~
~~
O
x
I
3 O~
e.ae '
:.
o~ ~ ~~ ~ ~~ ~~
p
~ Y
••:.4 !
w ~~ ~
~~ ~
t
, g0 "~--
`
,
~
1 ~~d; ~0
~IS I T
O
~~ 50t ~~ - _ I - ~~'I f - f` 1 I
x.:n_ a M
s~ 3 ~ r ~I ~ ry N; ~
b=
,I
:; D4
~ `~~~
~, __
,~ ~,; s
,~~
w.~
i
~~ ~~~ ~
r# ~' ~
~~' 1 ~ `~
~ ~{ ~ ~ s~
~' i ~~
~~„~,
~~-~
nsO~
I I
.-."h l ~J
__-~_+_-_-- p
"il I
I . w° a
i ,~ i ~ ~
~ .~~ ~ •
,...,, .:I ~., ~ ~'~~~.
__._J ._J '~~..'.
1~ 9..r, ,
4 __I I
~ ~~
2 ~4 e 1
~_ _:
h..
1
I ;.. 'I
v
-,.
I ~" i
u !__.i~FL _.
of p
^~ e,~
I-
~, , _}
7 ~~
~;
n- ~ - l~
~.,x,~.w ,,,ax.ury
sxn ix , xra .ssn-,»-cu, ..~o~ ~ ,, ossss noseuu~W ~,a~la>II3
l~l$ UBW 0E9 ~
N
c
cress Nw snrMVaNNIw
Ali ilslLLWM.311N3AY Y:InNNIM IAO ~nosaNNm so 3,ru
~i ~ s«," ~w +u~
,~311H]tlr a3Y315YJ3M
y~ J ~I S2l3121d(1DOV3H NMO1NM04
Ny Ip aOO1~ ,~,
~ ~
~.
saa to ue s]aau at
PI fl P 4 tl NtlWIdtlA '" . ~" ~ `"" °w "°~" "`°
;, u a;~ , ~ ,~ ~ 2l3AR! Hl3 ~O ~NVB
13A31 a3MOl
~MOd 1300W3M ONtl NgLI00tl
Q
4x, nm, ui~a3l bw~x .
E
~ c~ ~~gg
~~ ~~ ~3"S
Q ~~ ~# ~~~
tL' ~#~ 9~ ~~~
w ~ s a¢ ~
c7 < m ~ x00000000000000000
0
3 ~ ~ ~ ~Sr ~-+!
r ~
~~. ~
~~ ~
I
u
~~ ~ ~ ~ ~ l
! ~ ~ ~
JJ. g + ~ -~
-~.- ,;
~~ ~ ~ .~~ ~
so ~~ ~
~ ~-~~
,... ~ b .
ti.. /g _. ~ ~~.
~~~ ~ ~~il
EA !M I 0
Fr " ~
,! ~ ~~ ~~
5
i~
Qy ~ _
!C ~a x _ ~
~ }XI IM XIX ~~ 'ii it {~Iippr' I
$::IN n elr _n fi._ J~f~a$~ O
A
t" J
~ ... ~~r~r„ ~ w
I I ~s -i}.1,g_ ~ ~
~----- 3~Y == W
I J ~
:.' i i~ a
r-- i .. , ~_ W ~
g s r y
'~I&_~ I __ .tP~ Q 9
3 ~ ~ r` J u
O
0
F
3
0
F
2
m
O
a
c
0
m
1 ~
m
r
m~
~Z
D
A
Zo
m
~_
z
~ '~
m ~
z
0
0
0
ICI
r
m
m
D
-{ m
D r
D
-i
z
O O
z
~
c
a
o \
\~
o '~
~ Z
w~Wa
~ ~ z ~ ~
o ~z ~
.., a a
~ ~ ro r~
_ ~N~ ~~-7
~ C/~
~ ~ y ~ a
NO ~ ~
o ~~Zx~
b~ ~
~ ~
~'m ~r'~
~ ~ t~
~ 9a.~2o C~/~
v
0
F
a
F
S
(D
O
a
c
O
m
N
<•
N
O
u
m
A
r
m~
~ z
D
-<
D ~
Zo
m
N
T Z
~1 ~
0
m~
r
m
Q
m
r
m
_~
O
Z
C
- a
\~
o ~
m~~a
"z`°~
o ~z~~
~
z ~ ~ t~
n
_
~ ~N ~"C/~
a
Q ~ 9
o ~ ~ ~ • d
'wzztci
'
o b ~
~
~. ~
~~
~ n~
~
~.~i .~2o C~l~
m
m
r
m
D
-~
Z
li ~ /
October i 1, 200
lair. Jim Simpson
The dank of ELk River
530 ~/Iain Street
Elk Fciver, Mi~T 5330
~: Corceptt:.al Cast 3?stimate for s~ownto~w~n Fsa~ Addition
Dear Tim:
Tad S~~redin, t3~e es'i~ator fill our office, put together 8 conceptual square footage cast
estimate. Wear:. ~~orlcing on a mere detailed estimate that ~,~ll be more accurs?e. T'nese
square foot casts include aiaild~g, site work, finishes, and professional fees. T~.ey don't
induce bank equipment, sites and fiuniture. stilt in cabinet work like the feller line
wor'~ is included.
We do not have the exact level of finish determined. but this is a level comparable to the
present building.
New ~Consti~c#.ion
Zower Level b,550 SF @ $155 ! S: _ $1,050,50
Main Level 6,532 SF @ $185 / SF = $1,253,920
Upper Level 5,275 SF @_ $170 / SF = $1,407 250
21,650 SF = $3,751,930
~tem+udel of ~~istinQ
Main Level 3,351 SF @ $90 / SF = $ 304,290
ZRoof Snow Load Structure (lump sum allowance) $ 100,000
Contingency 2%
$ 53,124
Tota!
54,239,344
509 ~~linnet;a ~vLnue Norfr1 • Suite 210 • r~tinneapcli~, ~titinnescta 55427
~8E.32; .L~ ] 7 • 753.54 ] .9:,52 • ficx 703.54 ] .91357
.. _.._.. ,. _ _ -- -L - '--
~ '''~ I Ii..IN... ~ ~,. __ _tl
_;y. _ ...
Tae squ~~ ~~~tagP i~r ;~evv cans#~~c~cn abo~~ :s 1,si60 LY ~~o?re u'~e ~~.~~ ~3r~et c
L~,l~~(~ ~ ". ~LL'~t1CLT.c~ ~~B 3C3Le ~ iO~I~I ~t~'18'tf3! 17.L'TL'~~'. i `1ti'iIi~C'7aTb° !?2.°;1{'. °v i'I1L.:', fie
~st~snate ~;e~ore ~.xe ~~sic +~n ~~e past.
;~LiL~r, Pri~cir~al Architect
Family Owned Since 1885
SEC ~ 3 ~00~
OF ELK RIVER
Member FDIC
MAIN STREET OFFICE • 630 Main Street • Elk River, MN 55330 • (763) 441-1000
December 21, 2005
Catherine Mehelich
Director of Economic Development
1306 Orono Parkway
Elk River, MN 55330
RE: Tax abatement application
Dear Cathy,
The Bank of Elk River pledges to complete the proposed addition within one year of
groundbreaking.
Z'he project architect says this is a realistic schedule unless there are major material shortages.
Please call me at 241-8528 if you have any questions.
Sincerely,
James M. Simpson
President
MAIN STREET • SCHOOL STREET • OTSEGO • ZIMMERMAN
ELK RIVER WAL-MART • MAPLE GROVE WAL-MART
www.TheBankofElkRiver.com
r'ity of
~.~lk
River
13065 Orono Parkway
Elk River, MN 55330
April 11, 2005
Pat Dwyer, Sr. V.P. & CFO
The Bank of EIk River
630 Main Street
Elk River, MN 55330
Dear Pat,
We appreciate the opportunity to respond to The Bank of Elk River's needs and interest in
expanding its facilities in downtown Elk River. We recognize the value of The Bank of Elk
River's retail and corporate presence downtown and look forward to working with you on
the proposed project. The proposed project as discussed at our meeting on March 29, 2005
is consistent with the City and HRA's goal for revitalizing downtown Elk River as a vibrant
retail and commercial area by stimulating new investment.
Based on the preliuluiary information that's been provided and discussed thus far, staff has
prepared this letter as a preluninary proposal for your consideration. Staff supports
recommending that the City and Sherburne County contribute to the project via apay-as-
you-go tax rebate of 100% of the increased City and County property taxes as a result of the
proposed project for a period of up to 10-years.
The actual amount of tax rebate assistance that could be provided under this structure would
be based on a number of factors including actual tax rates and market value in the year
following construction. Staff estimates that the tax rebate assistance could be within the
following range depending on the final increased market value as a result of the project:
Increased Market Value $ 2,440,000 (20,000sf @ $122/sf)
Combined C@ and County Taxes $41,000 annual
Total Estimated Amount of Assistance $ 410,000 after 10-years
Increased Market Value $ 3,300,000 (20,000sf @ $165/sf)
Combined Cit~and County Taxes $ 55,900 annual
Total Estimated Amount of Assistance $ 559,000 after 10-year
Phone: 763.635.1000
Fax: 763.635.1090
www.ci.elk-river.mn.us
April 11, 2005
Page 2 of 2
We understand that the proposed range of assistance cannot match the significant
investment that The Bank of Elk River will make with the proposed project. We look
forward to meeting with you to discuss and refine this preliminary proposal as it relates to
your project needs.
We hope that you will find downtown Elk River to be the continued home of The Bank of
Elk River's retail and corporate office. Please feel free to contact either one of us at 763-
635-1000 if you have any questions.
Sincerely,
~~,e%~Ut ~~l/C2111.1~
Patrick Klaers
Ciry Administrator
~ ~
Catherine Mehelich
Director of Economic Development
MEETING OF THE ELK RIVER CITY COUNCIL
HELD AT THE ELK RIVER CITY HALL
MONDAY, JULY I I, 2005
Members Present: Mayor Klinzing, Councilmembers Dietz, Farber, Gumphrey, and Moon
Members Absent: None
Staff Present: City Administrator Pat Maers, City Engineer Terry Maurer, Planning
Director Michele McPherson, Director of Economic Development
Catherine Mehelich, Assistant Director of Economic Development Heidi
Steinmetz, Finance and Administration Services Director Lori Johnson,
City Attorney Peter Beck, and City Clerk Joan Schmidt
Call Meeting To Order
Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called
to order at 6:30 p.m. by Mayor Klinzing.
2. Consider 7/11/2005 Agenda
MOVED BY COUNCILMEMBER MOTIN AND SECONDED BY
COUNCILMEMBER FARBER TO APPROVE THE AGENDA AS PRESENTED.
MOTION CARRIED 5-0.
Consider Consent Agenda
MOVED BY COUNCILMEMBER MOTIN AND SECONDED BY
COUNCILEMBER FARBER TO APPROVE THE FOLLOWING CONSENT
AGENDA ITEMS:
3.1. JUNE 27, 2005 COUNCIL MINUTES
3.2. CONSIDER WESTBOUND BIDS
3.3. RESOLUTION ACKNOWLEDGING CONTRIBUTIONS TO THE
POLICE DEPARTMENT FROM THE BANK OF ELK RIVER.
MOTION CARRIED 5-0.
4. Omen Mike
No one appeared.
Worksession
5.1. Update on Bank of Elk River Downtown Building Proposal
Director of Economic Development Catherine Mehelich presented her staff report
regarding the proposal to expand The Bank of Elk River to accommodate current and future
growth. She stated that bank representatives wished to discuss with the City Council the use
of Tax Rebate Financing assistance and flexibility on parking requirements.
Ciry Council Minutes
July 11, 2005
Page 2
Representatives from The Bank of Elk River present were John Babcock and Pat Dwyer.
Mr. Dwyer explained how they are outgrowing their current facility, will need approximately
40,000 square feet, and are anticipating adding second and third floors to the existing
building. He indicated that even though expansion at the downtown site is more expensive
than new construction on the vacant land they own in Otsego, they wish to remain in
downtown Elk River and have purchased the Boelter's site along Highway 10 for additional
parking.
Rick Keillor with Vanman Architects and Builders, Inc. explained the design for the site.
The second floor addition of approximately 20,000 square feet would be the first phase.
Phase One would also consist of a community room in the basement. Phase Two would be
the addition of the third level adding an additional approximately 10,000 square feet.
Ms. Mehelich explained that this project does not qualify for Tax Increment Financing (TIF)
but would qualify for Tax Rebate Financing (TRF). Staff has estimated $400,000-600,000 of
TRF money could be available from the City and County in a 10-year period.
City Administrator Klaers stated that the size of this project and having a building three
stories in height is consistent with the redevelopment and expansion goals of the HRA and
complements the size and scope of the two other downtown revitalization projects that are
currently taking place.
Director of Planning Michele McPherson explained that with the parking requirement for
banks, the total number of spaces required for the building after expansion would be 210
spaces. The Bank's current site after expansion plus the Boelter's lot to the east provides a
total of 104 parking spaces. She stated that in the past the City has not required individual
sites to provide 100% of their required parking and staff believes that this trend should
continue with any bank expansion.
Ms. McPherson stated that even though the code requires 210 spaces for parking, she
believes that what they will provide and with the sharing of other parking areas, it seems
reasonable for them not to have to provide this 100%. She stated that this may need to be
reevaluated after all the downtown area projects are completed but that she feels that the
parking they are proposing to provide should be sufficient.
Ms. McPherson stated that parking in the Boetler's site has been determined to be an
accessory use and staff will be reviewing the parking plan for site plan approval, at which
time such items as access, grading and drainage, and landscaping will be reviewed.
Councilmember Dietz inquired of Mr. Dwyer if the employees would park in the downtown
area. Mr. Dwyer answered yes they would.
Councilmember Dietz inquired if the 104 parking spaces meet the bank's needs. Mr. Dwyer
stated yes and that they are willing to work with this number to show their commitment to
remain in the downtown. He stated that individuals could park in the King Avenue parking
lot and other public parking areas.
Mayor Klinzing stated that she and the council wish to have the bank remain in Elk River
and wish to help in whatever way possible to allow them to stay.
Ciry Council Minutes
July 11, 2005
Page 3
Councilmember Dietz inquired of the bank representatives if what they heard tonight was
positive for staying. Mr. Dwyer indicated that it was.
Councilmember Motin stated that he agrees with what has been stated tonight and fully
supports the use of TRF for this project. He did indicate apprehension over the parking
issue. He is in favor of moving forward but feels we need to look at how we can get
additional parking in the downtown area.
Mr. Babcock stated that their major concern in respect to parking is that when they need to
do the expansion for the third floor (perhaps several years from now) there will not be an
issue regarding parking. He indicated that what they need now is some reasonable assurance
that it is understood that should they start doing Phase One soon and Phase Two in the
future that the parking won't be an issue in the future.
Councilmember Dietz asked for a timeframe. Mr. Dwyer stated that they are restricted in
their current building for space and need this addition just as soon as possible.
It was the consensus of this Council to indicate to future councils that with
expansion on this site years from now for a third level, that parking is not an issue
that should prevent the planned future expansion.
5.2. Downtown Revitalization Project -Discussion with MetroPlains
This portion of the Council Meeting was a Joint Meeting with the HRA. HRA Chairman
Stewart Wilson called the HRA meeting to order. Commissioners present were: Louise
Kuester, Jean Lieser, Larry Toth and Paul Motin.
Director of Economic Development Catherine Mehelich presented her staff report. Vern
Hanson of MetroPlains Development and Michele Mongeon of JLG Architects were
present.
Mr. Hanson explained that they have come back with a revised version of the Bluffs of Elk
River project, keeping the original character of the sketch as well as providing the overall
context to the City of the whole project.
Ms. Mongeon indicated that the new revision shows the main part of the building extending
westerly popping up the three southerly pieces. She stated that detailing of the top piece is
much more prominent. She stated that the corner element is slightly taller with recessed
balconies. This current perspective illustrates recessing brick between the two windows with
some subtle changes in the rear.
Councilmember Motin asked if the back piece is set back. Ms. Mongeon indicated that the
red piece is in the same plane with the brick veneer sticking out. She stated if you look at
the floor plan this would be on the same plane. The red brick sticks out in front of the buff
colored portion of the building.
Councilmember Gumphrey inquired as to how much higher the tower is. Ms. Mongeon
indicated 18 - 20 inches. Councilmember Gumphrey inquired if there would be a separate
balcony on the fourth floor for each unit. Ms. Mongeon replied that they are working with a
market study advisor in keeping this option flexible. She stated that some people may wish
to have two-space areas.
TAX REBATE FINANCING PROPOSAL REVIEW WORKSHEET
TC~ RF C`C~MPI FTFI~ RY C`ITY CTAFF
1. The project meets the criteria set forth in Section V of the Tax Rebate Financing
policy.
_~ a) Meets at least one of the objectives in Section III.
b) Demonstrates need for TRF with the but for analysis.
c) Consistent with all city plans and ordinances.
~ d) Serves at least two public purposes as defined in Section V.
2. Ratio of Private to Public Investment in Project: Points: S
$ 5 Private investment ~ 5:1 5
$ EGY~,OG~ Public Investment 4:1 4
~o t / Ratio Private :Public Financing 3:1 3
2:1 2
Less than 2:1 1
3. Job Creation in the Ciry of Elk River: Points: S
~ Number of new jobs as a result of the project. 25+ 5
Number of existing/retained jobs 20+ 4
~~ Total 15+ 3
10+ 2
Less than 10 1
4. Ratio of TRF to new jobs created/retained: Points: S
$~~~~ TRF request $8,000 or less 5
~~ Number of neav jobs created/retained $10,000 or less 4
$ G~8/~ of TRF per neu~ job created /retained $12,000 or less 3
$15,000 or less 2
Over $15,000 1
5. Wage Level of jobs created: Points:
Average hourly wage ~ Over $21 / hour 5
of jobs created/retained: ~~ ~ $18-21 /hour 4
$14-17 /hour 3
$10-13 /hour 2
Under $10 /hour 1
6. Project size: Points: 3
The project will result in the construction 40,000+ 5
of square feet ~~ 30,000+ 4
20,000+ 3
10,000+ 2
10,000 or less 1
City of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 12 -
7. Ty e of Project: Points: ~_
100% Owner Occupied 5
Mix Owner Occupied & Investment 4
Investment Property 3
P
i
t
8. Use: o
n
s:
Industrial or Business Park Project 5
_J~ Commercial Rehabilitation/Redevelopment 4
9. The project will pay annual Points: ~~
property taxes in the first fully 35,000+ 5
assessed year of $l~ /53 25,000+ 4
15,000+ 3
10,000+ 2
Under $10,000 1
10. Likelihood that the project will result in Points:
unsubsidized, spin-off development. High 5
t/1~~Ioderate 3
Low 1
Sub -Total Points: ~ ~ of a possible 45 points.
9. Bonus Points Bonus Points:
!~ The project will be 100% Pay-asyougo TRF. 3 points
/' The project contributes to the goals of Energy City. 2 points
• Product promotes sensible use of energy, OA
• Project utilizes significant energy efficient design &/or
materials in construction.
Total Points•
Overall project analysis: Hi h 45-38 oints
Moderate 37-29 points
Low 28-20 points
Not Eligible 19-0 points
City of Elk Rivex
Tax Rebate Financing Policy, Amended August 2002 - 13 -
From:
12128/2005 12:08 #030 P.002
Shorburn® County
~1SSES50R
GERALD E, KRITZECK, S.A,M.A.
13880 Highway JO
Elk River, MN 55330
December 28, 2005 (763) 241-2880 0 1-800-438-0577 ~ Fax: (763) 241-7195
www. co. sherburne. mn. us
Catherine Mehelich
Director of Economic Development
City of Elk River
13065 Orono Parkway
Elk River, Mn 55330
The following tax estimate is based on the information that you provided me with on the
remodel and new addition to the Bank of Elk River. The estimate of market value is for
the 2006 assessment as a completed project. Parcel # 75-405-0340, 75-405-0320
Estimated Market Value Building $3,704,400.00
Estimated Mazket Value Land $ 810,200.00
Improvements to Land $ 25,000.00
Total $4,539,600.00
The estimated tax payable in 2007 using the 2006 proposed tax rate would be
approximately $168,153.00.
If you have any questions please contact me at (763) 241-2885
Sincerely,
ohn Cullen
Chief Deputy Assessor
Sherburne County Assessor's Office
Cc: Brian Bensen, Gerald Kritzeck
c qty of
Economic Development
Tax Rebate Financing
Policy & Application
Amended: August 2002
Adopted: April 10, 2000
City of Elk River, Minnesota
Table of Contents
I. Policy Purpose 3
II. Difference Between TRF & TIF
3
III. Objectives of Tax Rebate Financing 3 - 4
IV. Policies for the Use of TRF 4 - 5
V. Project Qualifications 5 - 6
VI. Subsidy Agreement & Reporting Requirements 6
VII. Application Process 7
City of Elk River 7
Application to Other Political Subdivisions 7
VIII. Application 8
Applicant Information 8
Project Information 9
Public Purpose 9
Sources & Uses 10
Checklist & Additional Information 1 1
IX. Application Review Worksheet 12
X. Exhibits 14
A Corporation/Partnership Description
B Project Description
C Shareholders
D But for Analysis
E Prospective Lessees
F Legal Description and PID Number
XI. Sample But-For Analysis 15
City of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 2 -
I. POLICY PURPOSE
For the purposes of this document, the term "City"shall include the Elk Kiver City Council, Economic
Development Authority, and Housing and I~edevelopmentAuthority.
The purpose of this policy is to establish the City of Elk River's position relating to the
use of Tax Rebate Financing (TRF), otherwise referred to as Tax Abatement, for private
development above and beyond the requirements and limitations set forth by State Law.
This policy shall be used as a guide in the processing and review of applications
requesting tax rebate assistance. The fundamental purpose of tax rebate frnancin~ in Elk
River is to encourage desirable development or redevelopment that would not otherwise
occur but for the assistance provided through TRF.
The City of Elk River is granted the power to utilize TRF by the Minnesota Tax
Abatement Act, as amended. It is the intent of the City to provide the minimum amount
of TRF, as well as other incentives, at the shortest term required for the project to
proceed. The City reserves the right to approve or reject projects on a case by case basis,
taking into consideration established policies, project criteria, and demand on city
services in relation to the potential benefits from the project. Meeting policy criteria does
not guarantee the award of TRF to the project. Approval or denial of one project is not
intended to set precedent for approval or denial of another project.
II. DIFFERENCE BETWEEN TRF &TIF
The primary difference between Tax Rebate Financing (TRF) and Tax Increment
Financing (TIF) is the way in which the dollars are awarded to the project. When TIF is
awarded to a project by the city, the other political subdivisions (the school district and
the county) are required to contribute their portion of the increased taxes to the project.
Conversely, when TRF is requested, each political subdivision has the option of granting
its portion of the increased taxes to the project. Subsequently, the dollars generated for
the project with TRF axe generally less than the dollars generated with TIF.
III. OBJECTIVES OF TAX REBATE FINANCING
As a matter of adopted policy, the City will consider using TRF to assist private
development projects to achieve one or more of the following objectives:
• To retain local jobs and/or increase the number and diversity of jobs that offer
stable employment and/or attractive wages and benefits.
• To enhance and diversify the city of Elk River's economic base.
• To encourage additional unsubsidized private development in the area, either
directly or indirectly through "spin off 'development.
• To facilitate the development process and to achieve development on sites
which would not be developed without TRF assistance.
• To remove blight and/or encourage redevelopment of commercial and
industrial areas in the city that result in high quality redevelopment and private
reinvestment.
City of Elk Rivex
Tax Rebate Financing Policy, Amended August 2002 - 3 -
• To offset increased costs of redevelopment (i.e. contaminated site clean up)
over and above the costs normally incurred in development.
• To create opportunities for affordable housing.
• To contribute to the implementation of other public policies, as adopted by the
city from time to time, such as the promotion of quality urban or architectural
design, energy conservation, and decreasing capital and/or operating costs of
local government.
IV. POLICIES FOR THE USE OF TRF
a. TRF assistance will be provided to the developer upon receipt of taxes by the
City, otherwise referred to as the pay-a.ryougo method. Requests for up front
financing will be considered on a case-by-case basis.
b. Any developer receiving TRF assistance shall provide a minimum of twenty
percent (20%) cash equity investment in the project. Projects utilizing the
SBA504 program will be required to provide a minimum of ten percent
(10%) cash equity investment.
c. TRF will not be used in circumstances where land and/or property price is in
excess of fair market value.
d. Developer shall be able to demonstrate a market demand for a proposed
project.
e. TRF will not be utilized in cases where it would create an unfair and
significant competitive financial advantage over other projects in the area.
£ TRF shall not be used for projects that would place extraordinary demands
on city services or for projects that would generate significant environmental
impacts.
g. The developer must provide adequate financial guarantees to ensure
completion of the project; including, but not limited to: assessment
agreements, letters of credit, personal guaranties, and etcetera.
h. The developer shall adequately demonstrate, to the City's sole satisfaction, an
ability to complete the proposed project based on past development
experience, general reputation, and credit history, among other factors,
including the size and scope of the proposed project.
i. For the purposes of underwriting the proposal, the developer shall provide
any requested market, financial, environmental, or other data requested by
the City or its consultants.
j. TRF proposals shall not be used to support speculative office projects.
Speculative projects are defined as those projects which have pre-leasing
agreements or letters of intent for less than 50% of the available space.
Ciry of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 4 -
In addition, leasible office projects must meet the following guidelines:
1. Evidence of the 50% occupancy must be reported to the Director of
Economic Development six months following an issued certificate of
occupancy.
2. 50% of the jobs within the leasible office building space must be
considered "new" jobs to the City of Elk River, meaning jobs not
located in the City at any time prior to occupying space in the project.
3. Business retention jobs will be considered on a one-for-one match to
job creation only in cases where job loss is specific and demonstrable in
accordance with the MN Business Subsidy Law. Evidence may include
documentation that the company will have to close involuntarily, or the
company has received an attractive offer to move to another state or
community.
k. All TRF proposals shall optimize the private development potential of a site.
V. PROJECT QUALIFICATIONS
All TRF projects considered by the City of Elk River must meet each of the following
requirements
a. The project shall meet at least one of the objectives set forth in Section III of
this document.
b. The use of TRF will be limited to:
• Industrial development, expansion, redevelopment, or
rehabilitation; or
• Commercial redevelopment or rehabilitation; or
• Research and development facilities that satisfy Business Park
zoning requirements; or
• Office facilities with a minimum new construction of 25,000
square feet and minimum market value of $1,000,000 upon
project completion; or
• Residential development and redevelopment may be eligible for
TRF under a separate set of policies and only with the
recommendation of the HRA.
The developer shall demonstrate that the project is not financially feasible
but for the use of TRF. Evaluation of the project's financial feasibility without
TRF shall be provided by the City's financial advisor on requests of over
$25,000 total.
d. The project shall comply with all provisions set forth in the state's
Tax Abatement Law, statues 469.1812 to 469.1815, as amended.
City of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 5 -
e. The project must be consistent with the City's Comprehensive Plan, Land
Use Plan, and Zoning Ordinances.
£ The project shall serve at least two of the following public purposes:
• Job creation or job retention.
• Increase of tax base.
• Enhancement or diversification of the city's economic base.
• Development or redevelopment that will spur additional private
investment in the area.
• Fulfillment of defined city objectives, such as those identified in the
Strategic Plan for Economic Development or the city's Comprehensive
Plan, among others.
• Removal of blight or the rehabilitation of a high profile or priority site.
VI. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS
All developers/businesses receiving Tax Rebate Financing assistance from the City
of Elk River shall be subject to the provisions and requirements set forth by the
City's Business Subsidy Criteria as adopted, and State Statute 116J.993 as
summarized below.
All developers/businesses receiving TRF assistance shall enter into a Subsidy
Agreement with the City of Elk River that identifies: the reason for the subsidy, the
public purpose served by the subsidy, and the goals for the subsidy, as well as other
subsidy agreement criteria set forth by Statute 116J.993.
The developer/business shall file a report annually for two years after the date the
benefit is received or until all goals set forth in the application and Subsidy
Agreement have been met, whichever is later. Reports shall be completed using the
format drafted by the State of Minnesota and shall be filed with the City of Elk
River no later than March 1 of each year for the previous calendar year. Businesses
fulfilling job creation requirements must file a report to that effect with the city
within 30 days of meeting the requirements.
The developer/business owner shall maintain and operate its facility at the site
where TRF assistance is used for a period of five years after the benefit is received.
In addition to attaining or exceeding the jobs and wages goals set forth in the
Subsidy Agreement, the borrower shall achieve at least one of the objectives set
forth in Section III of this document.
Developers /Businesses failing to comply with the above provisions will be subject
to fines, repayment requirements, termination of the assistance, and be deemed
ineligible by the State to receive any loans or grants from public entities for a period
of five years.
City of Elk Rivex
Tax Rebate Financing Policy, Amended August 2002 - 6 -
VII. APPLICATION PROCESS FOR TRF
A. CITY OF ELK RIVER
Applicant submits the completed application along with a $5,000 application fee.
The application fee will be used toward the cost of services provided in the
evaluation of financial feasibility and preparation of legal documents. The balance
of the application fee will be returned to the applicant.
2. City staff reviews the application and completes the Application Review
Worksheet.
3. Results of the Worksheet are submitted to the appropriate governing authorities
for preliminary approval of the proposal.
4. If preliminary approval is granted, all necessary notices, resolutions and agreements
are prepared by City staff and/or consultants.
5. Public hearing(s) on the proposed project are held.
The EDA or HRA recommends approval or denial of the proposal to the City
Council.
The City Council grants final approval or denial of the proposal.
B. APPLICATIONS TO OTHER POLITICAL SUBDIVISIONS
It is recommended that applicants intending to seek TRF from Sherburne County
and/or School District 728 make their applications to those bodies concurrent with
their application to the City of Elk River. For more information on applying for TRF
through Sherburne County and/or School District 728, contact:
Sherburne County Administrator
763-241-2701
Superintendent -School District 728
763-241-3400
City of Elk Rivex
Tax Rebate Financing Policy, Amended August 2002 - 7 -
VIII. APPLICATION FOR TAX REBATE FINANCING
A. APPLICANT INFORMATION
Name of Corporation/Partnership
Address
Primary Contact
Address
Phone Fax Email
On a separate sheet, please provide the following:
• Brief description of the corporation/partnership's business, including history,
principal product or service, etc... Attach as Exhibit A .
• Brief description of the proposed project. Attach as Exhibit B.
• List names of officers and shareholders/partners with more than five percent
(5%) interest in the corporation/partnership. Attach as Exhibit C.
• Abut for analysis and narrative. Attach as Exhibit D.
Attorney Name
Phone
Fax Email
Accountant Name
Address
Phone Fax Email
Contractor Name
Address
Phone
Fax Email
Engineer Name
Address
Phone Fax Email
Architect Name
Address
Phone Fax Email
City of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 8 -
B. PROJECT INFORMATION
1. The project will be:
Industrial New Construction Expansion Redevelopment /Rehab.
Office/research facility that conforms to business park standards
Commercial Redevelopment/Rehabilitation
Other
2. In addition to the City of Elk River, applicant is requesting TRF funds from:
Sherburne County School District 728
3. The project will be: -Owner Occupied Leased Space
• If leased space, please attach a list names and addresses of future lessees and indicate
the status of commitments or lease agreements. Attach as Exhibit E.
4. Project Address
• Include Legal Description and PID Number. Attach as Exhibit F
5. Site Plan Attached Yes No
6. Total Amount of TRF Requested $ over,
City Portion of TRF: Annual $_
County Portion of TRF: Annual $_
ISD 728 Portion of TRF: Annual $
7
years.
Total $
Total $
Total $
Current Real Estate Taxes on Project Site: $
Estimated Real Estate Taxes upon Completion: Phase I $
Phase II $
8. Construction Start Date:
Construction Completion Date:
If Phased Project
Year
Year
Completed
Completed
C. PUBLIC PURPOSE
It is the policy of the City of Elk River that the use of Tax Rebate Financing should
result in a benefit to the public. Please indicate how this project will serve a public
purpose.
Job Creation/Retention Number of existing jobs
Number of jobs created by project
Average hourly wage of jobs created/retained
-New industrial development which will result in additional private
investment in the area.
-Enhancement and/or diversification of the city's economic base.
-The project contributes to the fulfillment of the City's Strategic
Plan for Economic Development.
-Removal of blight.
-Rehabilitation of a high profile or priority site.
Other:
City of Elk Rivex
Tax Rebate Financing Policy, Amended August 2002 - ~ -
D. SOURCES & USES
SOURCES NAME
Bank Loan
Other Private Funds
Equity
Fed Grant/Loan
State Grant/Loan
EDA Micro Loan
Tax Rebate Financing
ID Bonds
TOTAL
USES
Land Acquisition
Site Development
Construction
Machinery & Equipment
Architectural & Engineering Fees
Legal Fees
Interest During Construction
Debt Service Reserve
Contingencies
TOTAL
City of Elk River
Tax Rebate Financing Policy, Amended August 2002
AMOUNT
AMOUNT
-1~-
E. ADDITIONAL DOCUMENTATION AND CHECKLIST
Applicants will also be required to provide the following documentation.
A) Written business plan, including a description of the business,
ownership/management, date established, products and services, and future
plans
B~ Financial Statements for Past Two Years
Profit & Loss Statement
Balance Sheet
C) Current Financial Statements
Profit & Loss Statement to Date
Balance Sheet to Date
D) Two Year Financial Projections
F) Personal Financial Statements of all Major Shareholders
Profit & Loss
Current Tax Return
G) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
H) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in the Project
I) Application fee of $5000
J) Itemized Project Construction Statement
K) Attach the following docun
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
-entation as Exhibits
- Corporation/Partnership Description
-Description of Project
-List of Shareholders/Partners
-But-For Analysis
- List of Prospective Lessees
-Legal Description
Note: All Major shareholders will be required to sign personal guarantees if up front
financing of the project is required.
The undersigned certifies that all information provided in this application is true and correct
to the best of the undersigned's knowledge. The undersigned authorizes the City of Elk
River to check credit references, verify financial and other information, and share this
information with other political subdivisions as needed. The undersigned also agrees to
provide any additional information as may be requested by the City after the filing of this
application.
Applicant Name Date
City of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 11 -
EXHIBIT A
Description of the corporation or partnership
~~~i~~=j~~=j
Description of the proposed project
EXHIBIT C
Names of officers and shareholders/partners with more than five percent (5%) interest in
the corporation/partnership.
EXHIBIT D
But for analysis
EXHIBIT E
Prospective Lessees
EXHIBIT F
Legal Description and PID Number
Ciry of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 14 -
X1. SAMPLE BUT-FOR ANALYSIS
WITH NO WITH
TAX REBATE FINANCING TAX REBATE FINANCING
SOURCES AND USES SOURCES AND USES
SOURCES SOURCES
Mortgage 9,600,000 8,667,000
Equity 2,400,000 2,400,00
Tax Rebate Financing 0 933,000
TOTAL SOURCES 12,000,000 12,000,000
USES USES
Land 1,500,000 1,500,000
Site Work 300,000 300,000
Soil Correction 468,000 468,000
Demolition 100,000 100,000
Relocation 65,000 65,000
Subtotal Land Costs 2,433,000 2,433,000
Construction 6,750,000 6,750,000
Finish Manufacturing 250,000 250,000
Subtotal Construction Costs 7,000,000 7,000,000
Soft Costs 350,000 350,000
Taxes 35,000 35,000
Finance Fees 850,000 850,000
Project Manager 542,000 542,000
Developer Fee 540,000 540,000
Contingency 250,000 250,000
Subtotal Soft Costs 2,567,000 2,567,000
TOTAL USES 12,000,000 12,000,000
Income Statement Income Statement
Sq. Ft. Per Sq. Ft. Sq. Ft. Per Sq. Ft.
Rent-Space 1 100,000 $8.00 800,000 100,000 $8.00 800,000
Rent-Space 2 25,000 $8.50 212,500 25,000 $8.50 212,500
Rent-Space 3 25,000 $9.00 225,000 25,000 $9.00 225,000
Other 0 $0.00 0 0 $0.00 0
1,237,500 1,237,500
Mortgage 20 Term 1,051,646 20 Term 949,439
9.00% Interest 9.00% Interest
9,600,000 Principal 8,667,000 Principal
Net Income 185,854 288,061
Total Return on Equity 7.74% 12.00%
City of Elk River
Tax Rebate Financing Policy, Amended August 2002 - 15 -
i
In the 19971egislativesesion, Representative Ron Abrams from Minnetonka
authored legislation to allow individual political subdivisions (county, cit
town, or school district) to return their proportional share of all or a portion of a
building's property taxes (see H.F. 2163, Laws of Minnesota, Article 2, Sections 45 to 48, or Minnesota
Statutes, Sections 469.1812 to 469.1815). Abatements were designed to give each jurisdiction a voice in
economic and redevelopment efforts, limit the state's financial liability through the school fmance system,
and enable new business retention efforts.
Complications arose in the mechanics of abatements and, more importantly, from the reintroduction of levy
limits for taxes payable in 1998 and 1999. The 1998 Legislature passed legislation to exempt these
abatements from the levy limits and also allow bonds to be issued as a means to finance the development.
The 1999 through 2003 Legislatures, in an effort to make abatement a more viable economic development
tool, has further expanded the scope of abatement authority.
The nuts and bolts of the abatement program aze as follows:
^ The abatement is a tax rebate rather than an exemption from paying taxes.
^ The taxpayer pays taxes on the abated property in the same manner it would if the taxes were not being
abated. The county pays the abatement to the general fund of the political subdivision without
identifying the amount of the abatement.
^ The 1999 Legislature expanded the meaning of the term abatement to encompass agreements to defer
property taxes without interest or penalties. The city, town, county or school district can levy taxes
as usual, defer payments for up to ten years, impose a set repayment schedule, and abate the penalties
and interest.
^ Towns may take action on tax abatement at any meeting, not only at their annual meeting. The 1999
Legislature gave the town boazd the power to approve the abatement resolution at other times, but
unfortunately, the new legislation did not change the defmition of "governing body". The 2001
Legislature corrects the defmition of governing body to authorize town boards (rather than the annual
meeting) to approve abatement, and is retroactive to the date of the 1999 change (May 26, 1999).
^ As of May 26, 1999, a school district may abate its entire tax capacity based levy (previously could
only abate 60% to 75%). A school district may not abate market value based levies. School boards,
also as of May 26, 1999, may now grant abatements for the entire term of the abatement (previously
they could only approve the abatement one yeaz at a time). School districts may levy an additional
property tax to pay for their abatements. The school district will not lose net revenue by using the
program.
^ The maximum term of the abatement is ten years if the city (or town), county, and school all
participate. If one or more entities decline, the maximum term is 15 for all participating entities, not
just the requesting unit of government, under legislation passed in 2001. The 2002 Legislature
extended the duration limit for a period of up to 20 years if the abatement is for a "qualified business".
^ The 2003 Legislature doubled the maximum that an entity can abate to the greater of $200,000 per yeaz
or 10% of the entity's levy.
^ Taxes payable from the market value of a new or existing building, and, as of May 26,1999, the value
of land and any fiscal disparities contributions (for metro and taconite credit areas only) may be
abated. The maximum annual abatement equals the political subdivision's local tax rate multiplied
by the net tax capacity of the parcel.
FREERS & ASSOC/AYES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113 651.697.8500
^ Abatements are authorized to finance public infrastructure, whether or not the benefitted infrastructure is on or adj acent
to the parcel for which the tax is abated. The owner of a parcel for which taxes are abated need not consent. Thus, a
political subdivision may approve an abatement for certain parcels and use the retained taxes to finance public
improvement projects.
^ The notification requirements include a public hearing with a 10 to 30 day publication notice.
^ The findings required by a council or board include general statements of tax base, preservation, employment, public
facilities, blight, or access to services.
^ G.O. Abatement Bonds can be issued without affecting net debt and can be issued without a referendum under certain
conditions. Authorities may increase their abatement levies to make up for shortfalls resulting from class rate
compression. Effective for bonds issued or sold after July 1, 2001, abatement bonds used for buildings primarily used
to conduct the business of a unit of government must require approval by the voters in a referendum, under legislation
passed in 2001.
^ Abatement does not require a property owners consent.
^ Abatements cannot be used in concert with tax increment financing, but can be utilized after a TIF district is decertified.
^ Effective for abatement levies payable beginning in 2002, the 2001 Legislature authorizes political subdivisions to
increase their abatement levies to make up for shortfalls from class rate compression.
Another issue which complicates the abatement program is the specific authority of a governmental body to pledge its
abatements to the debt of another governmental entity, if the debt is not a G.O. Abatement Bond. Many attorneys differ on
the interpretations of the pledges allowed and what exactly constitutes a G.O. Abatement Bond.
We recommend that abatement always be utilized in conjunction with a development agreement that clearly spells out the
developer's responsibilities with respect to improvements and job and wage goals.
Abatement is a "business subsidy" and as such is subject to Minnesota Statutes, Sections 116J.993 through 116J.995.
Ehlers & Associates, Inc. -Abatement