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<br />Case # 3 <br /> <br />Cost of Doing Business Analysis Update <br />By: Sean Sullivan, Economic Development Coordinator <br /> <br />Background: <br /> <br />The Ramsey EDA directed Staff to research the cost associated with development, and operation, <br />of businesses within the City of Ramsey to answer questions raised by a private developer. The <br />developer suggested that the amount of development fees had become so high that it no longer <br />was a price advantage to bring clients to the City. In addition to the development fees there were <br />additional concerns about the monthly costs of operating a business within the City. Staffwas <br />directed to investigate these claims and to put together an analysis that would show how Ramsey <br />compares to other cities in this region. <br /> <br />Methodology: <br /> <br />Staff conducted interviews with some area cities and researched websites to compile the <br />information needed to estimate development fees, taxes, electric costs and other pertinent <br />operating costs for a number of active cities in the Northwest quadrant of the metro area. The <br />analysis is divided into development fees and operating costs. The proposed project was a <br />40,000 SF building tax assessed at 2.5 Million that was located on 4 acres. It was assessed 6.5 <br />SAC units, 30,000 gallons of quarterly water usage, 44300 KWh and 164 KW of demand for <br />electric, and a RED of 11.75. The usage of energy and water are based on a hypothetical light <br />manufacturer in the machining field. It was necessary to quantify this project to get an accurate <br />representation of cost in all of the cities studied. It should be noted that there was not any <br />analysis done on land prices in these communities and this is also an important factor in site <br />selection._IhefilJding~. ofthi~u~md)'!ll"~1J~loF. <br /> <br />Conclusions: <br /> <br />Development fees are costs incurred by a business at the time of development of a new project. <br />Attached is a table that compares the cost in Ramsey to 11 other cities in this region. Ramsey is <br />near the top (2nd most expensive) for development fees but this does not take into consideration <br />any Tax Increment Financing. In a typical TIP project most of these fees are included in the <br />purchase price for the property and are written down with the assistance. The net cost to the <br />developer is less and it makes up for the deviation of $21,589 from the Mean. The fact that <br />Ramsey does have some higher fees in comparison to some other communities means that more <br />money will be going to construct maintain those systems and keep them in good working order. <br />At first read it appears that Ramsey's Development Fees impose a large impact on new <br />businesses coming to the City but upon further analysis the net cost to the develop is not a <br />deterrent to new businesses locating in Ramsey. <br /> <br />The monthly fees and charges applicable to operating a business in Ramsey are included in this <br />study. Ramsey is near the bottom (4th least expensive) for monthly operation fees which is a <br />good position. This illustrates that Ramsey charges a little more for contribution to the <br />construction of its infrastructure (Development Fees) but once it is installed the charges are very <br />reasonable. Anoka County appears to have a significant property tax advantage for businesses <br />that choose to locate here. Our local energy provider, Connexus Energy, performs well compared <br /> <br />13 <br />