Agenda - Economic Development Authority - 06/06/2013

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Economic Development Authority (EDA) 4. 2. Meeting Date: 06/06/2013 Submitted For: Patrick Brama By: Patrick Brama, Administrative Services Title: Economic Development Prospect Foxtrot: Business Subsidy Application Background: The purpose of this case is to review Prospect Foxtrot's Business Subsidy Application and draft a recommendation for the City Council. For background information on Prospect Foxtrot and the proposed project please review case one of the EDA Agenda (06/06/2013). The City's Economic Development consultant, Mike Mulrooney (Advanced Consulting Group), will be presenting this case. Observations/Alternatives: Attached to this case is Prospect Foxtrot's business plan, project overview document and project sources and uses of funds table. Business and personal financial statements submitted by the prospect will remain confidential. Mr. Mulrooney will review the application, underwrite the project and present findings and alternatives for EDA consideration. Business Subsidies Background (General) The purpose of local economic development is to (1) expand the City's tax base and (2) create/retain jobs. Increasing commercial tax base allows Cities to provide services at a lower cost per capita. Creating jobs not only offers residents employment opportunities, it also drives consumer dollars to a local economy. Often times, due to competition and/or financial gaps, City's financially participate in economic development projects (known as Business Subsidies). The City of Ramsey has actively participated in economic development for the past 20 years; a number of local businesses relocated to Ramsey as a direct result of City business subsidies. The City utilizes a business subsidy policy to guide the review process of business subsidy applications. The City of Ramsey adopted an updated policy in 2008 (see attached). Outline of the business subsidy policy: • Project must pass 'But For' Test. Meaning, 'But For' City assistance a project would not occur. • Project must be feasible. Meaning, the City will be allowed to independently underwrite the project. • Project assistance will be provided at $25,000 per qualified job (70% of median wage, $13.77) • Project must establish 2 year job, wage and tax base goals Prospect Foxtrot Subsidy Application Prospect Foxtrot is requesting a business subsidy in the form of a complete land write down. Meaning, reducing the cost of land to zero. The value of the three parcels Prospect Foxtrot is interested in purchasing is $924,000 (County valuation). In order to meet the City's business subsidy policy requirements (for the requested land write down), Prospect Foxtrot would need to produce 37 jobs paying at least $13.77 an hour within two years. Prospect Foxtrot is willing to commit to said requirements.