Equipment dealership proposed near Mitchell's RamadaDeveloper seeks TIF to aid $1.7 million project that would carry Bobcat, Kubota, Midsota lines.
By: Staff reports, The Daily Republic
A vacant lot south of the Mitchell Ramada Inn and Suites would be developed into a large equipment dealership under a plan scheduled for review today.
The plan includes the construction of an 11,000-square-foot building sometime this year to house a Bobcat dealership with Kubota tractor and lawn-care product lines, a Grand Rental franchise and a Midstota trailer line.
The business is projected to employ seven to 10 full-time employees upon opening and is expected to grow to 20 full-time employees by the fifth year of operation. Annual sales are projected to be $3 million to $4 million in the first year of operation, with growth to $10 million by the completion of the fifth year.
The developer, listed as Morris Inc., a South Dakota corporation, has asked the city of Mitchell to create a tax increment financing (TIF) district to aid the project.
In a TIF district, financing is issued to cover the cost of initial development work. The new and higher property taxes sparked by construction in the district are then captured for an agreed-upon number of years to pay off the financing. During that period, the tax revenue flows to the debt instead of to taxing entities like cities and counties, which begin receiving the revenue after the debt is paid off or the TIF period ends.
The proposed TIF plan on file with the city calls for $200,000 in financing for items including land grading, street paving, water and sewer service installation, and property acquisition. The plan includes several possible means by which the financing could be secured, including the issuance of bonds by the city. The proposed duration of the TIF is the amount of time needed to pay off the financing, not to exceed 20 years.
Another $1.693 million of non-TIF money is projected to be spent by the developers. That includes $590,969 to buy the land and $1.102 million to construct the building.
The land is currently valued for tax purposes at $136,620. The improvements are expected to raise the valuation by $1.406 million. That growth is known as the “increment,” which is the portion of the valuation from which taxes will be captured to pay off the financing.
The city of Mitchell’s Tax Increment Financing Review Committee will convene at 4 p.m. today at City Hall to consider the proposed TIF district. The committee’s recommendation will go to the Mitchell Planning and Zoning Commission, which will forward a recommendation to the Mitchell City Council.