6.3. SR 12-21-2009'^~/
ilk REQUEST FOR ACTION
River
To Item Number
Ma or & Ci Council 6.3.
Agenda Section Meeting Date Prepared by
Community Development December 21, 2009 Catherine Mehelich, Director of
Economic Develo ment
Item Description Reviewed by
Consider Extending Time for Meeting Wage & Job Goals Lori ohnson, Ci Administrator
Under the Tax Abatement and Business Subsidy Agreement for Reviewed by
The Bank of Elk River Project -Public Hearing
Action Requested
Following the public hearing, the Council is asked to authorize an extension up to two years to The Bank
of Elk River for meeting the wage and job goals outlined in the Tax Abatement & Business Subsidy
Agreement.
Background/Discussion
In April 2006, The Bank of Elk River entered into a Tax Abatement & Business Subsidy Agreement with
the City for the renovation and construction of a 20,000sf expansion to its downtown facility, and
committing to create 20 full time jobs at a wage of $15/hour by September 2009. Under the agreement
the developer is eligible to receive tax abatement for a portion of eligible renovation costs up to $300,000
provided on apay-as-you-go basis (commencing 2008).
Under the MN Business Subsidy Law, public agencies are required to report annually on the progress
toward job and wage goals for two years, or until the goals are met, whichever is later. As of the end of
September 2009 (two-years), the developer has created 10 full time jobs to date. The attached letter from
The Bank of Elk River indicates the developer's response in their attempt to achieve the wage and job
goals. Due to economic conditions, the developer is requesting the City's consideration of up to a two
year extension to achieve these goals. The request would extend the deadline to September 2011. The
developer has been invited to the Council meeting to answer any questions.
Staff recommends that the City Council authorize a two year extension for meeting the job and wage
goals established in the agreement .due to economic conditions.
Financial Impact
The agreement allows that if goals are met in part, the City has the option to reduce the subsidy on a
prorated basis to the jobs created, or consider an extension of the term to meet the goals. To date the
developer has received total tax abatement in the amount of $29,166. The term of the tax abatement is
up to 12-years or until the reimbursement amount is reached. If the developer does not meet the goals by
the end of the extension term, the City retains the option to reduce the subsidy.
Attachments
• Correspondence from The Bank of Elk River dated November 5, 2009.
S:\EDA\BUSINESS SUBSIDY\Bank of Elk River\BankofElkRiver.Extension Action Requested 12 2] 09.doc
Action Motion by Second by Vote
Follow Up
S:\EDA\BUSINESS SUBSIDY\Bank of Elk River\BankOfElkRiver.Extension Action Requested 12 21 09.doc
~ Bank
November 5, 2009
Catherine Mehelich
Director of Economic Development
13065 Orono Parkway
Elk River, MN 55330
Dear Catherine:
~~~~~ ~~~ N~V ~ b~
ZOgg
In April of 2006 we reported an FTE number of 63, which represented 56 full time and 18 part time
employees. As of 9-30-09 we have 72.62 FTE's which represents 66 full time and 10 part time
employees.
Due to the recent economic conditions, we would like to request an extension of two years to reach our
original goal.
Thank you for your consideration.
Sincerely,
Patrick H. Dwyer
President
630 Main Street, Elk River, MN 55330', p) 763-441-1000 f) 763-441-0847 ' www.thebankofelkriver.com