by April Scheinoha
The Thief River Falls City Council has approved establishing an economic development Tax Increment Financing district to facilitate Digi-Key’s expansion plans. The matter was approved at the council meeting Tuesday, April 18.
Digi-Key is planning to build a fulfillment, valued-added manufacturing and warehouse center on the site of its current western parking lot. A skywalk would connect the new building to the current facility. Digi-Key would like to start construction in spring 2018.
Located southwest of Digi-Key, nearby city property would become the company’s new western parking lot. However, the council has yet to approve selling the Municipal Service Center property to Digi-Key. The council has already made arrangements to move some equipment out of that building.
Digi-Key’s project is estimated to add an additional 1,000-plus jobs over 10 years at Digi-Key. The building, technology and equipment are expected to be an investment of $300 million in Thief River Falls, according to information provided by the city.
Digi-Key’s expansion plans are also progressing at the State Capitol. However, it is awaiting the outcome of a conference committee since both bills passed each house.
When Digi-Key began formulating its plans, city leaders listed several incentives to entice Digi-Key to build here. One incentive was an economic development TIF district. With economic development TIF districts, most of the increased taxes from the new development are used to fund the infrastructure improvements for nine years. The current taxes are still collected and given to the appropriate government groups.
The annual tax increment is estimated to be up to $1,112,926 for the Digi-Key project. Tax increment can be used for land acquisition, site improvements/preparation, utilities, and other qualifying improvements. The TIF plan has an estimated budget of $9,793,859, which includes administrative costs and interest.
It is estimated that the property will have a market value of $36,689,615 after the improvements are made. It currently has a market value of $6,521,915.
The council also approved the creation of an interloan fund to cover the city’s administrative expenses related to the TIF district in advance of the project.