Agenda - Council Work Session - 03/12/2013

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Meaning, the City would not yield a full built out potential for several years. In order to insure proposed scenarios were realistic for the market, Staff reviewed with builders (Mortenson and Kraus Anderson), real estate agents (CBRE), Greater MSP (regional economic development agency), the State of Minnesota (Department of Employment and Economic Development), the City's economic development consultant (Mike Mulrooney) and the City's planning consultant (Stantec). With the information above in mind, Staff developed the attached cost/benefit analysis. Said analysis renders a number of conclusions. Staff reviewed this information in detail at the February EDA meeting and intends to provide the City Council with a brief overview. Below is a summary of conclusions: (1) From an annual cash flow prospective (City of Ramsey only), data center developments scenarios result in a significantly higher general tax revenue stream than does a residential development. 1 Data Center = $276,742, 2 Data Center = $223,714, Residential = $28,263 (2) From a one time land transaction scenario perspective, a residential development scenario results in a higher return for the City. Data Centers = 0- $500,000, Residential $1,000,000. (3) Considering the City's strategic plan of using revenues from the Subject Property to pay for a new fire station, Staff would conclude data center scenarios provide a stronger and more complete financial solution than does a residential development. See fire station attachment (updated). NOTE: Staff updated fire station analysis. The original fire stati analysis was an in house draft estimate. The new updated analysis includes market input data from the City's financial consultant, Northland Securities. Moving Forward: Zoning If the EDA and City Council decide they would like to move forward with pursuit of a data center development, the next step in this process is zoning. As it stands today, the Subject Property is located within the Public /Quasi Public Zoning District. A Comprehensive Plan and Zoning Amendment would need to be approved to allow for a data center user. Staff would ask the EDA and City Council for direction to begin this process by engaging surrounding property owners via an open house. Then, Staff will report findings from said open house; and, develop a proposed zoning and long range planning solution for consideration by the EDA and City Council. Recognized Environmental Conditions As a result of the Shovel Ready certification process, three "recognized environmental conditions" were identified on the Subject Property by Braun Inertec (environmental services contractor). In order to clear said "recognized environmental conditions" from the property, they would need to be tested. Meaning, additional soil borings would need to be attained and reviewed. Staff will bring back a request for proposals (RFP) for said service at the April EDA meeting. Funding Source: NA Staff Recommendation: A number of options exist as the EDA considers the development of the Subject Property: (1) Move forward with pursuing a data center user(s) [STAFF RECOMMENDATION] Considering the attached cost/benefit analysis, pursing option 1 makes financial sense for the City, and may still fall generally within future land use plans and compatibility with surrounding land uses. Additionally, this development provides a solution to finance the City's new fire station. Aside from the financial aspect of this review, the only foreseeable drawback of this development is a potential negative reaction from the public relative to land use planning. The unknown variable of public feedback is part of Staffs recommendation of an open house to complete the land use analysis.