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Case #3 CONSIDER PSD LLC BUSINESS SUBSIDY REQUEST By: Heidi A. Nelson, Deputy City Administrator/Community Development Director Background: The City recently received application from PSD, LLC requesting assistance with sewer access charges (SAC) and water access charges (WAC) for the Wells Catering/restaurant development — The Falls — at the 7533 Sunwood Drive location. Wells Catering would be relocating from another location within the City of Ramsey to this location within The COR. As members will recall, the EDA recently preliminarily approved a Revolving Loan Fund Application for Wells Catering, pending City Council approval, to fund equipment as part of this relocation in the amount of $65,000. City Council approval is pending receipt of the lease agreement between PSD LLC and Wells Catering and the bank commitment letter for the private financing for Wells Catering. Observations: This project would be charged 11 SAC units (2,100 a unit) and 11 WAC units (1,627 a unit), see attached letter from Metropolitan Council. This is the amount requested by the applicant: $40,997. There is no bank financing in this project, it is funded 100% with owner equity. Generally when the EDA lends assistance to a project, it is done in an effort to fund a gap in the bank financing and owner equity provided for the project. It is difficult to ascertain the necessity of public assistance for this project as there is no bank financing in the project and it is potentially feasible that the owner could provide the additional funding for the project with equity. A project proforma and financial statements for PSD LLC and their principals were not provided with the application. PSD LLC states that this assistance will allow them to provide Wells Catering a lease at a lesser rate to accommodate the lease at their existing site through April 1, 2011. As of the writing of this case, the proposed lease agreement between PSD LLC and Wells Catering has not been received for review. An additional measure for the justification of public assistance is job creation. With the addition of The Falls to the Ramsey Office Plaza Building at 7533 Sunwood Drive, PSD, LLC will be creating two full time jobs: one (1) maintenance person, one (1) property management/marketing person. Wells Catering will be creating two (2) new jobs and converting four (4) part-time positions to full time positions. The average wage predicted for these jobs is $15 per hour. Median wage for the seven - county metro is $19.13 for all jobs for 2010 per DEED; EDA policy requires that jobs meet 70% of the median wage, which would be $13.39 per hour; thus the jobs created by the project meet the test. If the EDA supports this application, the EDA could consider structuring the assistance similar to the structure for the Sophia Ramsey LLC assistance package, whereby, if the restaurant remains in business for five years, the assistance could become forgivable. Other options for the EDA to consider would be to buy-out the end of the lease at Wells Catering's current Location. EDA members requested information regarding the assistance package that was provided to Sophia Ramsey LLC; the EDA and City Council cases and minutes regarding approval of that assistance package are attached for EDA review. Funding Source: Funding for this assistance is proposed to come from the EDA budget.