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Management Analyst Brama explained that Patriot Converting is a 24- employee manufacturing/cardboard cutting company located in Anoka currently occupying 24,000 square feet and the company desires to expand to 77,000 square feet with 37 employees: He stated the company has selected the public works campus and this site would require infrastructure improvements and vacation of right -of -way as well as entering into an option agreement with the City. He advised that some engineering work and site surveying has been done and a business subsidy application has been submitted by the company's owners, Brian Stilwell and Mike Stilwell. He noted that the owners were not present at the EDA meeting today. 4.02: Economic Development Prospect Foxtrot: Business Subsidy Application Management Analyst Brama provided historical background regarding the City's business subsidy practices and stated the City has guiding policies that must be met in order to provide a business subsidy, including a requirement that the project must meet the "but for" test and the project must be feasible, as well as a requirement that assistance can be no more than $25,000 per qualified job and the business subsidy agreement must establish job and wage goals. He advised the City has been active in economic development and has participated in TIF land write- downs, noting that a large number of businesses in Ramsey were attracted to the City utilizing a TIF write -down. He stated that Patriot Converting is requesting a complete land write -down, valued at $757,000 or $2.00 per square foot. He pointed out that the earlier valuation of $924,000 was a County valuation and staff used the recent Diamond Graphics purchase as a comparable sale; in addition, staff contacted the appraiser who provided the fair market valuation for Diamond Graphics and the appraiser felt this could be used as a comparable sale price. He stated that based on the City's policy, the City has the ability to provide $25,000 times 37 employees or $925,000 as a business subsidy for this project. Mr. Mulrooney advised that Patriot Converting has a buyer interested in purchasing their existing building and the buyer is demanding that they be out of the building by December 31, 2013. He stated that the City's public works site is the only site that can work within their timeframe. He explained there are a number of parcels involved in this expansion and the project would require construction of a cul -de -sac with vacation of the roadway. He noted that some of the offsite project costs would not be financeable costs by a bank lender because utilities are not included in overall project costs from a financing perspective. He distributed information regarding sources and uses of funds and stated the value of the site has been determined to be $758,000. He stated the prospect has estimated the cost to construct a building at $4.2 million and has estimated equipment costs of $600,000. He stated that professional fees, closing costs, contingency and interim interest are estimated at $155,000 bringing the total project cost to $5.7 million, noting this figure does not include the offsite costs of bringing in utilities. He advised the prospect has a history of using SBA 504 financing and plans to use this financing again. He pointed out that this project also anticipates the City's land write -down of $191,469 and explained that staff completed a tax increment analysis and what the project would generate over the life of the tax increment district in present value terms. He stated staff also looked at different types of tax increment districts, including the establishment of a redevelopment district. He explained that a redevelopment district would provide 25 years in increment; however, there are special rules for qualifying the site as a redevelopment district and staff does not believe the site can meet the test of being a redevelopment district because a large portion of the property is currently vacant and does not have buildings on it in need of substantial rehabilitation. He stated staff and the City's Economic Development Authority /June 6, 2013 Page 2 of 7