Loading...
HomeMy WebLinkAboutItem 03.a City of Lakeville Community & Economic Development Memorandum To: Mayor and City Council Members Justin Miller, City Administrator From: David L. Olson, Community and Economic Development Director Copy: Rick Howden, Economic Development Specialist Kevin McKinnon, Deputy Commissioner - DEED Date: June 18, 2015 Subject: Review of Proposed Post Holdings Headquarters Job Retention Incentive In discussions with representatives from Post Holdings (“Post”) earlier this Spring, regarding locating their new combined cereal division that will be called Post Consumer Brands, both the City and the Minnesota Department of Employment and Economic Development (DEED) proposed job retention incentives. The City proposed a job retention incentive of $1,500 per retained job with a minimum of 200 jobs and a maximum of 250 MOM Brands jobs that are located in Lakeville. This results in a range of retention incentive of $300,000 to $375,000. The proposed funding source of this job retention incentive is Tax Abatement. The two buildings on approximately 20 acres previously occupied by MOM Brands are included in the Fairfield Business Campus Redevelopment TIF District until December 31, 2022. These captured tax increments are being used to retire the bonds that were issued to fund the original acquisition and development of the Fairfield Business Campus by the City in the late 1980s. It is recommended that beginning in 2023, the City’s portion of the property taxes on the two now Post owned buildings be abated to fund the job retention incentive of up to $375,000. The current amount of the City’s portion of the property taxes on these two buildings is $80,545. Based on the proposed level of assistance, this would result in a 4-5 year abatement of the City’s property taxes. The School District and County will receive their normal portion of the property taxes beginning in 2023. Post has recently committed to retaining the full number of 250 jobs that existed at MOM Brands prior to the acquisition by Post. The City proposes to provide the maximum job retention incentive of $375,000 after the retained jobs have been in place for one-year. Staff is recommending that this job retention incentive be funded from the City’s Liquor Fund. Repayment to the fund by the City would commence in 2023 and would be repaid over the next 4-5 years with interest depending on the estimated market value and City tax rate in 2023. The City Council will need to approve the inter-fund loan from the Liquor Fund including repayment terms and interest rate. The City will also be submitting an application to the Minnesota Investment Fund (MIF) administered by the Minnesota Department of Employment and Economic Development (DEED) on behalf of Post. The application will propose a state funded incentive of $3,000 per job retained up to 250 jobs for a maximum of $750,000 with similar terms to the proposed City’s Tax Abatement incentive. The City Council will need to enter into an agreement with DEED and Post for the MIF portion when it is approved by DEED. ACTION REQUESTED Staff is seeking the Council’s support to move forward with the process of designating the Post property in the Fairfield Business Campus for a future City Tax Abatement project and to also work with Post to submit an application to the Minnesota Investment Fund program administered by DEED.