5. EDSR 04-09-2007ITEM # 5.
fiver
MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic
DATE: April 9, 2007
Developmen /~
SUBJECT: Consider Resolution Approving the Decertification of Tax
Increment Financing District No. 15 (McChesney) in the City of
Elk River
Attachments
TIF Plan -TIF District No. 15 Summary
EDA Resolution Approving the Decertification of TIF District No. 15 (McChesney)
Background
In 1996 the EDA and City created TIF District No. 15 in order to provide financing
assistance for the construction of McChesney Cabinet's 10,000 square foot industrial facility.
Located in the McChesney Industrial Park along Meadowvale Road, McChesney Cabinets is
a manufacturer and installer of custom cabinets, countertops and specialty wood items. The
attached TIF Plan Summary provides additional background about the project.
Issue
The duration of TIF District 15 was limited to 8 years after the receipt of the first tax
increment (July 1998). Since the obligations of the TIF District to the developer and its
useful life toward financially supporting other TIF Districts has reached its term, it is
necessary to decertify the TIF District at this time. As a result of the decertification, all local
property taxes generated by the property (currently in the amount of $10,200) will be
distributed to the school, county and city in the same manner as all other property taxes.
Requested Action
In accordance with statutory requirements, the EDA is asked to consider the attached
Resolution Approving the Decertification of TIF District No. 15.
TAX INCREMENT FINANCING PLAN
TAX INCREMENT FINANCING DISTRICT NO. 15
SUMMARY
McChesney Cabinets, 18983 York Street, Elk River, Minnesota seeks $35,000
in Tax Increment Financing assistance to support its proposed construction of
a 10,000 square foot facility in the McChesney Industrial Park. McChesney
Cabinets is a manufacturer and installer of custom cabinets and countertops
and specialty wood items. McChesney Cabinets currently occupies 3,000
square feet at 18983 York Street in Elk River, Minnesota, and currently has
two (2) full time employees at this facility. As a result of the expansion,
approximately two new full-time jobs will be created in 1997.
The Economic Development Authority for the City of Elk River, Minnesota is
proposing the creation of an Economic Development District pursuant to the
Tax Increment Financing Act. Tax increment funds will be used to "write -
down" the price or value of the development site. The Economic Development
Authority for the City of Elk River proposes to reimburse McChesney
Cabinets for the value associated with Lot 9 under a pay-as-you-go Tax
Increment Financing District.
The 10,000 square foot facility will have a finished market value estimated at
$300,000 which produces property taxes of approximately $12,600 per year.
Of this total, $11,400 will be new additional taxes. These new funds will be
"captured" by the Economic Development Authority so that the City of Elk
River can recover the $35,000 in tax increment assistance. After these funds
have been repaid, Tax Increment Financing District No. 15 will be
decertified, thereby enabling all local taxing jurisdictions (county, school,
city, etc.) to share in the project's property taxes.
The Economic Development Authority for the City of Elk River, Minnesota
anticipates that Tax Increment Financing District No. 15 will exist for
approximately six (6) years; during which time tax increment funds will be
collected for four (4) years.
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION 07-01
RESOLUTION APPROVING THE DECERTIFICATION OF TAX
INCREMENT FINANCING DISTRICT NO. 15 WITHIN DEVELOPMENT
DISTRICT NO. I IN THE CITY OF ELK RIVER
WHEREAS, on June 10, 1996 the Elk River Economic Development Authority (the
"Authority") created its Tax Increment Financing District No. 15., (the "District") within its
Development District No. 1 (the "Project"); and
WHEREAS, as of the date hereof all bonds and obligations to which tax increment from
the District had been pledged have been paid in full or defeased and all other costs of the
Project have been paid; and
WHEREAS, the Tax Increment Financing plan adopted on June 10, 1996 for Tax
Increment Financing District No. 15 requires, pursuant to M.S. 469.176, Subd.1, that the
duration of the Tax Increment Financing District 15 will be eight years after the date of
receipt by the City of the first tax increment or ten years from approval of the tax increment
financing plan, whichever is less; and
WHEREAS, the continuance of TIF District No. 15 serves no public or private purpose;
and
WHEREAS, the Authority desires by this resolution to cause the decertification due to its
payment of obligations of the District after which all property taxes generated by property
within the Districts will be distributed in the same manner as all other property taxes
beginning July 3, 2007,
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Elk
River Economic Development Authority that the city's staff shall take such action as is
necessary to cause the County Auditor of Sherburne County to decertify the District as a tax
increment district and to no longer remit tax increment from the District to the Authority.
DATED: April 9, 2007
Jeffrey A. Gongoll, President
ATTEST:
Catherine Mehelich, Executive Director
S:AEDA\TIFV'I'if15\DL.CER'I'.DOC