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Management Analyst Brama stated there would be a five -year lease in place for the City's salt <br />shed with an option to renew. Moving costs have not yet been considered. <br />City Administrator Ulrich felt it would be important for the City to recover some of its <br />infrastructure costs and the cost of moving the salt structure. He stated when this item was <br />brought to the City Council, the project anticipated the move of the full public works campus and <br />the City has purchased twenty acres for this move, adding the proposed agreement is ten years <br />and then the City is out. He agreed this will be an important decision for the City to make and <br />means a potential $8 million new public works facility with debt service of $500,000 per year. <br />Member Riley stated he did not want to discuss scenario #2 involving the full write -down and <br />suggested that the EDA focus only on scenario #1. <br />Member LeTourneau asked if another funding source has been considered and asked whether <br />Anoka County HRA dollars might be available. <br />Management Analyst Brama stated if the City Council passed a resolution to enable economic <br />development powers through the County's HRA, then the City would be eligible for County <br />HRA monies. <br />Chairperson Steffen stated it does not appear that this prospect's current revenue stream can <br />support the required debt service and asked how confident staff is that the prospect can double <br />their business to support that. <br />Mr. Mulrooney felt this deserves further underwriting analysis and agreed staff will have to dig <br />deeper into the projections, adding that this would happen as part of the normal underwriting <br />process. <br />Member LeTourneau requested further information about the benefits to the City for proceeding <br />with this prospect. <br />Management Analyst Brama reviewed the project benefits, including 37 full time jobs averaging <br />$18.00 per hour within two years, noting that the prospect's goal is to have 50 employees. He <br />stated the prospect has indicated it wants to expand an additional 48,000 square feet for a total of <br />125,000 square feet and their long -term goal is 200,000 square feet. He stated the property is <br />currently tax exempt and if the City did tax increment financing, when the property comes back <br />online the base value would be captured. He added if the prospect purchased the property under <br />the option agreement, the City would receive the fair market value of the property. <br />Chairperson Steffen asked about the risk to City if it were to do a $191,000 write -down. <br />Management Analyst Brama stated if the City entered into a business subsidy agreement and tax <br />increment financing agreement and the property owner defaulted, the City is insulated from that <br />risk. He added if the City provided a RLF and the property owner defaulted, the City would be <br />at risk. <br />Economic Development Authority /June 6, 2013 <br />Page 4 of 7 <br />