ITEM 4.1 Mississippi ShoresRequest for
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City Council Action
DEPARTMENT INFORMATION
ORIGINATING DEPARTMENT: q REQUESTOR' MEETING DATE'
Administration I Lori Johnson, City Administrator March 25, 2013
PRESENTER(s): REVIEWED BY: ITEM #.
Lori Johnson, City Administrator 4.1
AGENDA ITEM DETAILS
RECOMMENDATION:
Recommend adoption of the attached resolution approving tax abatement assistance of $25,000 for
Northern L & L Properties and Family Speech and Therapy Services, LLC.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
Tax Abatement Agreement I Yes
BACK GROU N DIJ USTI FICATI ON:
Last fall, Melissa Lonsky, owner of Family Speech and Therapy Services and Northern L & L
Properties approached the City regarding assistance to relocate her Elk River location to Otsego
by purchasing and rehabilitating the former daycare building building located at 15590 901h
Street NE. Family Speech and Therapy Services has its main office in Andover and a smaller
office in Elk River. The relocation from Elk River to Oto will allow space for Family Speech
and Therapy Services to expand to 15 employees at the Otsego office in the future. In order to
allow the expansion and relocation to Otsego, Family Speech and Therapy requested $50,000 in
financial assistance. On March 14, 2013, the Economic Development Authority (EISA) approved
a $25,000 economic development loan to Family Speech and Therapy. In addition, the EDA
approved a motion recommending to the City Council that the Council approve tax abatement
assistance of $25,000 beginning in 2014 with the repayment of the entire city share of property
tax on the Family Speech and Therapy property.
The project meets the following criteria and priorities of the EDA and City Is economic
development policies making it eligible for financial assistance:
Increase the number and diversity of jobs that offer stable employment and/or
attractive wages and benefits
Increase or preserve the tax base
• Help provide access to services for residents to the City
• Rehabilitate existing underutilized or substandard buildings
The current taxable market value of the property is $340,000. The purchase price paid by Ms.
Lonsky was $275,000. The $934,000 project would bring the property for tax purposes up to
around $600,000 to $650,000 according to the assessor's estimate meaning that the County felt
the property was over valued at $340,000 and it would have probably dropped for taxes
payable in 2014 absent building improvements. The development project value generates an
additional $2,770 per year in city tax assuming the value increases by $300,000 and the current
value remained at $340,000. Attached is a spreadsheet stating the projected tax generated
from this project. Also attached is a construction budget for the exterior improvements that
will be made to the building. The total construction cost for exterior improvements is
approximately $140,000.
Further, the business brings 6.5 jobs to Otsego immediately with the potential of a total of 15 in
the future. The six therapist jobs pay an average of $60,000 per year, three time the minimum
pay requirement in the City's assistance policies. Assuming $50,000 in assistance, the level of
assistance per job is $7,700, again well below the City's assistance limit.
The City Attorney has drafted a Tax Abatement resolution for consideration after the public
hearing. The resolution follows the recommendation from the EDA that the assistance begin in
2014 and that the $25,000 is repaid with the entire city tax on the parcel. If approved, a Tax
Abatement Agreement consistent with the resolution will be drafted by the City Attorney for
execution by Family Speech and Therapy Services LLC and Northern L & L Properties. The
agreement would include the lot combination stipulation previously discussed and that the
agreement terminates immediately if the business and/or jobs cease, the property taxes are
not paid timely, or the Economic Development Loan is in default.
SUPPORTING DOCUMENTS: Xci ATTACHED ci NONE
* Resoltition 2013 — 16 Approving Tax Abatement for Northern L & L Properties and
Family Speech and Therapy Services, LLC
* Tax abatement spreadsheet
0 Exterior improvement pro Ject budget
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Please word motion as you viould like it to app of in the minutes.
Motion to approve Resolution 2013-16 Approving Tax Abatement for Northern L & L
Properties and Family Speech and Therapy Services, LLC
BUDGET INFORMATION
FUNDING: BUDGETED: ❑ YES
N/A
NO
ACTION TAKEN
n APPROVED AS REQUESTED D DENIED ❑ TABLED n OTHER (List changes)
COMMLNTS:
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO. 2013-16
RESOLUTION APPROVING TAX ABATEMENT FOR NORTHERN L
PROPERTIES AND FAMILY SPEECH AND THERAPY SERVICES, LLC
WHEREAS, Northern L&L Properties has purchased property located withiii the
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City of Otsego identified as Lot 1, Block I Missi 'ssippi Shores '11 Addition;
WHEREAS,, Family Speech & Therapy Services, LLC will utilize the existing
building on that property for a speech therapy and OCCLIpational therapy facility;
and
WHEREAS, Family Speech & Therapy, LLC will and has substantially Upgraded
the bUilding on the premises; and
WHEREAS, Family Speech &Therapy, LLC will bring a number of new well
compensated jobs to Otsego; and
WHEREAS, Northern L&L and Family Speech and Therapy, LLC have
requested assistance from the City in the form of tax abatement of the City share
of property taxes in the total amount of $25,000.00; and
WHERE AS, the application of the above named parties has been reviewed by the
EDA Finance Committee and the EDA and both have recommended to the
Council that the requested tax abatement be granted In the amount of $25,000.00.
WHEREAS, on Monday, March 25, 2013 the Otsego City Council, after proper
notice, held a public hearing on the proposed tax abatement.
NOW THEREFORE , BE IT RESOLVED by the City Council of the City of
Otsego, Wright County, Minnesota as follows:
1. The City Council hereby approves a tax abatement of the entire City share
of property taxes actually paid on the above described real property (Lot, 1,
Block I, Mississippi Shores 8"' Addition, PID 118-216-00 10 10) in an
amount not to exceed $25,,000.00 and commencing in 2014, subject to the
terms and conditions of the Tax Abatement Agreement.
2. The City Council finds that the tax abatement will bring needed jobs to the
City, will rebabilitate and upgrade the property involved mid will enhance
the economic viability of the City.
3. City staff is hereby directed to draft a Tax Abatement Agreement between
the City of Otsego and Northern L&L Properties and Family Speech &
Therapy, LLC setting forth the conditions of City approval as well as all
necessat-y language to comply with State statutes and the adopted City
Policy.
4. The Mayor and City Clerk are hereby directed to execute the above tamed
Tax Abatement Agreement on behalf of the City.
ADOPTED this 25t" day of March, 2013 by the Otsego City Council.
MOTION to approve made by Council Member
seconded by Cotincil Member
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
Jessica Stockamp, Mayor
Tani Loff, City Clerk
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Family Speech and Therapy Services,ULC
Otsego Building Renovation
Exterior Proiect Improvements and Costs:
Exter1orwaUcove dngmateria Is(JamesHardyBoa rd
and EF|S)
Exterior wall stone
New window openings
New exterior entrances
Replace sidewalk
Landscaping
Earthwork
Reduced to fund reframing
Irrigation and sod
Reduced tofund reframing fogade
Privacy Fence
Deleted from project to neduce costs
Parking lot
Exterior Construction Budget
March 21, 2013
5 1401407