Agenda - Council Work Session - 03/12/2013

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CC Work Session 3. 2. Meeting Date: 03/12/2013 Submitted For: Patrick Brama By: Patrick Brama, Administrative Services Title: 15153 Nowthen Blvd: Review Cost Benefit Analysis of Former Municipal Center Site Background: The EDA and City Council have expressed interest in developing theformer municipal center site, 15153 Nowthen Boulevard ( "Subject Property ") for a data center user(s). The City is partnering with Connexus Energy to pursue this development opportunity. As part of this effort, Staff was directed to pursue a "Shovel Ready" development certification through the State of Minnesota. Additionally, both the EDA and the City Council have requested Staff develop a cost/benefit analysis on potential development scenarios for the Subject Property. PURPOSE OF CASE: 1) Provide Council with an update on the Shovel Ready certification program application. 2) Review the attached cost/benefit analysis; and consider moving forward with marketing and positioning the Subject Property for a data center user(s). CASE HISTORY: This case was discussed by the EDA on February 14, 2013. The EDA directed Staff to move forward with: Marketing and positioning the Subject Property for a data center user(s). Specifically Including: (A) Zoning; move forward with open house, develop zoning proposal (B) Recognized Environmental Conditions; move forward with RFP (request for proposal) (C) Order commercial appraisal on the Subject Property (estimated $1,200 cost, EDA budget -- funding source) Observations: Shovel Ready Certification Progress: Staff has submitted an application, including all required information to the State of Minnesota. Connexus Energy will be paying the program application fee (see attached invoice). It is expected the State of Minnesota will certify the Subject Property this spring; exact timing is to- be- determined. Cost /Benefit Analysis: The EDA and City Council have expressed interest in developing the Subject Property for a data center user. However, before committing additional resources and directing Staff to pursue a data center user(s), both the EDA and City Council have requested Staff to develop a cost/benefit analysis. The intention of the analysis is to compare a data center development to a residential development, from a financial prospective. Three scenarios were considered by Staff (1) Data Center, Single User, 250,000 square feet (2) Data Center, Two Users, 200,000 square feet (3) Residential Development, 47 single family homes Attached to this case are sketch plans of the proposed development scenarios. Said sketch plans were used to develop input information for the referenced cost/benefit analysis. Please note, the three scenarios provided are considered "best- case - scenarios" for full build out. Every option carries risk. For example, a homebuilder may only take down ten homes a year; or, a data center development happens in phases over a number of years.