Lake City extends $2.65M for expansion
LAKE CITY — One of Lake City’s biggest employers, Hearth & Home Technologies, will expand its manufacturing facility by 150,000 square feet under an agreement approved Monday night.
The Lake City City Council approved a package of $2.65 million in subsidies, including a $2.105 million tax-increment financing (TIF) district and a $544,986 business subsidy loan to help the company expand. The incentives from the city will help with a $12 million project.
Mike Bubony, the city’s financial advisor, said the sum involved in TIF is an estimation of the taxes that would be collected over the term of the agreement — nine years — based on the increased taxable valuation of the property once the project is complete. However, the city will not necessarily pay that total amount of the TIF.
If the property is valued less than expected, the city only returns the money on the increased valuation to Hearth & Home Technologies, so it could be less if $2.105 million is not collected in nine years.
Also, the term could end up less than nine years if the improvements are valued higher and money is collected and reimbursed to the company more quickly, Bubony told the council.
Because the TIF is a pay-as-you-go system, there is no risk for the city, and Lake City would not be responsible for any shortfall of funds collected in the TIF.
Cheryl Key, a Wabasha County Commissioner and a member of the city’s EDA board, said, “I’d encourage you to move forward with the TIF district. This is the third or fourth expansion for them.”
Hearth & Home had been wooed by two places out of state — one in Pennsylvania and one in Iowa — before a deal was made to stay in Lake City.
The new TIF district comes on the heels of a former TIF district being passed for Hearth & Home in 2016, but the board decertified that TIF in order to enact the new one.
Once the new TIF is complete, the city will earn tax income on the full amount of the new taxable value.
“We come out millions of dollars ahead from the use of TIF as opposed to not using TIF,” said City Administrator Rob Keehn.