East Bethel approves TIF support for Aggressive Hydraulics move

by Karin Craig
For the Union

On Oct. 3 the East Bethel City Council took an important step toward stimulating business growth and expanding its tax base by voting unanimously to establish the city’s first tax-increment financing (TIF) district as well as a new business subsidy policy.

Paul Johnson, an owner of Aggressive Hydraulics, thanks those gathered at the Oct. 8 groundbreaking for their roles in making the new 60,000 square-foot facility in East Bethel a reality. The new building is expected to be completed in April. Business owners and their families were joined by the East Bethel mayor and city council and many others for the celebration. Photo by Karin Craig

Paul Johnson, an owner of Aggressive Hydraulics, thanks those gathered at the Oct. 8 groundbreaking for their roles in making the new 60,000 square-foot facility in East Bethel a reality. The new building is expected to be completed in April. Business owners and their families were joined by the East Bethel mayor and city council and many others for the celebration. Photo by Karin Craig

These actions, prompted by an inquiry in July by Aggressive Hydraulics, will enable that business to begin constructing a new 60,000 square-foot building within the city of East Bethel, supplying a significant boost in property value and thus also the city’s tax revenue.

As part of its agreement with the city, Aggressive Hydraulics is held to a minimum assessment agreement of $3 million for the term of the TIF district or repayment of the TIF note, whichever is shorter. After construction is complete, the property will generate approximately $84,000 in tax revenue annually, a sharp contrast to the $660 currently generated by the site.

The city is issuing a $225,000, five percent interest pay-as-you go TIF note to Aggressive Hydraulics to close the company’s funding gap, the funds for which will be fronted by Village Bank. The note will be paid from 90 percent of the tax increment (the future increase in tax revenues created by the greater property value).

Aggressive Hydraulics is currently located in Blaine and has been in business for more than 10 years. Groundbreaking for the new building took place on Monday, Oct. 8, just west of Village Bank at 18800 Ulysses St. N.E., with the mayor and city council and other city staff attending.

Construction is expected to be complete in April 2013. Aggressive Hydraulics currently employs 45 people, but the company is growing quickly and expects to employ up to 75 people in the near future.

State law requires that cities adopt a business subsidy policy if it is to provide assistance to a private party for $150,000 or more. The policy must contain job creation goals and wage requirements. East Bethel’s business subsidy policy requires at least one job to be created within two years of a new business building being occupied at a wage level of at least 150 percent of minimum wage, which equates to about $11 per hour. The policy also requires applicants for subsidy to pay a $3,000 non-refundable application fee and a $10,000 escrow fee to cover the city’s administrative costs.

“The city of East Bethel is pleased that Aggressive Hydraulics has selected this site for their relocation,” states an Oct. 8 press release from the city of East Bethel. “Aggressive Hydraulics recognized the competitive advantages that East Bethel can offer a company, including four-lane highway access, available sites, utility infrastructure, a pro-business community environment and a strategic location in the metropolitan Minneapolis-St. Paul market. The city provided planning for utilities connections and liaison services, streamlined the permit process and created a TIF district to provide a source of gap financing for the project.”

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