Agenda - Economic Development Authority - 07/09/2015

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Economic Development Authority (EDA) Meeting Date: 07/09/2015 Submitted For: Patrick Brama, Administrative Services By: Patrick Brama, Administrative Services 4. 1. Title: Consider Multiple Actions Related to a Potential Life Fitness Expansion and Redevelopment Project Purpose/Background: PURPOSE Consider multiple actions related to a potential Life Fitness expansion and redevelopment project. In summary, the proposed project includes: (1) construction of a new $4M - 48,325 square foot expansion on the existing Life Fitness property in Ramsey; and (2) $585,000 acquisition and clean-up of the Health Quest property to prepare Life Fitness for their future second expansion in Ramsey. Life Fitness has asked the City to investigate all financial incentives available for this project (see attached cover letter). Specifically, Life Fitness is interested in tools that will help overcome costs associated with the purchase and clean up the Health Quest property (redevelopment costs). STEP 1 (this case): begin process to establish a new TIF district, apply for State funds and begin underwriting project. The purpose of this case is not to "award" any financial incentives to Life Fitness. However, this case begins the State required public process to "allow" the City to award financial incentives to Life Fitness in the future. STEP 2 (future case): review underwriting of project, consider authorization to establish a new TIF district, consider awarding TIF agreement/ business subsidy agreement (which will include a specific amount of TIF), and consider awarding DEED program incentives. BACKGROUND (proposed project) This project includes three individual parcels. The first two parcels, totaling 17.12 acres are currently owned by Life Fitness (Brunswick Corporation). These two contiguous parcels are home to a 280,000 square foot state-of-the-art Life Fitness manufacturing facility. Life Fitness currently employs about 300 full-time and nearly 100 part-time people at their Ramsey facility. This facility is responsible for manufacturing Life Fitness (http://www.lifefitness.com/index.html) and Hammer Strength (http://www.lifefitness.com/commercial/hammerstrength.html) brand exercise equipment. Life Fitness is owned by Brunswick Corporation (http://www.brunswick.com/), a publicly traded company based out of Lake Forest, Illinois, with a market capitalization of $4.88 billion and $119M in world-wide sales for 2014 (NYSE: BC). In addition to their primary facility in Ramsey, Life Fitness leases approximately 60,000 square feet of warehouse space in Coon Rapids. In order to improve their operations process and more effectively manufacture their products, Life Fitness would like to consolidate their Minnesota operations in into one facility—their Ramsey facility. This will require an expansion on their existing site in Ramsey. Currently, Life Fitness has space for a 48,325 square foot expansion on their existing Ramsey site. This proposed expansion is referred to as Expansion #1 and would increase the size of the existing Life Fitness building in Ramsey from 280,000 square feet to 328,500 total square feet. Life Fitness has indicated Expansion #1 will result in the creation of 26 new full-time jobs paying a minimum $16.85 per hour (with an additional $7.08 of benefits per hour) over the course of two years. Life Fitness would like to begin construction on Expansion #1 August 26, 2015. Expansion #1 is anticipated to be completed by spring 2016.