Agenda - Economic Development Authority - 09/09/2010

Home

Memo To: EDA From: Amber G. Miller, Planning Manager Date: 9/1 /2010 Re: Summary of Sophia Ramsey LLC Subsidy Agreement In April 2009 the EDA was first presented with the request for public subsidy assistance from Sophia Ramsey to assist in securing a lease with asit-down restaurant tenant. At that time, the proposal was to occupy, approximately 4,000 square feet and the estimated SAC and WAC charges were $101,481.. Staff had met with the leasing agent and the restaurant owner; the build-out of the space was projected to be between $600,000 and $800,000 (depending on if they were going to take additional bays). This cost would be paid by the restaurant tenant. In order to make the deal work, the property owner agreed to contribute $200,000 toward the build-out. Subsequent to that, it was determined that a grease interceptor would also be required to be installed at a cost to the restaurant of an additional $75,000. At this point, they requested relief for the cost of the SAC and WAC costs to get the project done. The EDA was asked to support the assistance package in general terms while Staff worked with the applicant to complete a business subsidy application. Direction was to direct staff to contact Park Midwest or the negotiating agent on behalf of Solomon to negotiate the terms of the SAC &WAC financing based on a approved sit- down restaurant user staying there greater than 6 months per year and to create a findings of facts that state that this is not an ongoing policy but aone-time situation that is intended to spur future growth in Ramsey's downtown development. Staff received the subsidy application along with personal financial statements of all major shareholders (principals) including the most recent 2 years of tax returns, income statement and balance sheetfor Sophia-Ramsey, and tax returns for the restaurant owners, prior to execution of any business subsidy agreement. In September of 2009, negotiations moved forward with the restaurant tenant determining that the best model for them would be to utilize the entire space of 8,090 square feet (including the outdoor dining area). The application indicated that they would be creating 78 new jobs with annual wage/salary payments of +$178,000. At this time a SAC and WAC estimate 'was prepared based on the new square footage and proposed seating was $209,863. This was based on a change in the square footage of the restaurant, and the number of seats. Both numbers were based on rough estimates prior to building plans being submitted for review by Met council or planning/building. The estimates were based on a rough. layout. In speaking with Mr. Sullivan, it was stafFs understanding that EDA approved the deal and the structure of the deal based on an estimate and it was subject to change; they agreed to fully fund the project. A draft agreement was taken to the City Council in ~3 9