|
In addition to Expansion #1, outlined above, Life Fitness would like to prepare for a second expansion of their
<br />Ramsey facility (Expansion #2). Because their existing site does not have sufficient space available for Expansion
<br />#2, additional land is required. Life Fitness has targeted a 3.0 acre, bank -owned, parcel located directly south, and
<br />adjacent to their existing Ramsey facility forExpansion #2. This property is currently home to a 20,000 square foot
<br />vacant/ blighted former health club known as Health Quest. It is estimated, acquiring the Health Quest property for
<br />Expansion #2, will allow for construction of a 50,000-60,000 square foot future expansion of the primary Life
<br />Fitness facility.
<br />Securing the Health Quest property does result in significant redevelopment costs for Life Fitness; including
<br />property acquisition $450,000, demolition and site clean-up $85,000, and capping of nearly 90 geo-thermal wells
<br />$50,000.
<br />In summary, the proposed project includes: (1) construction of a new $4M - 48,500 square foot expansion on the
<br />existing Life Fitness property in Ramsey; and (2) $585,000 acquisition and clean-up of the Health Quest property to
<br />prepare Life Fitness for their future second expansion in Ramsey.
<br />BACKGROUND (Why are incentives being requested?)
<br />This project removes a 20,000 square foot, blighted, bank -owned, building that has sat vacant, and available for
<br />purchase, since 2004 (Health Quest property). In order to develop the Health Quest property, significant
<br />redevelopment costs need to be overcome; including: acquisition of a property that carries an existing building
<br />($425,000), demolition and site clean-up ($71,000), and capping of 90 geo-thermal wells ($46,000). Based on
<br />discussion with the current Health Quest property owner, and prospects previously interested in the Health Quest
<br />property, redevelopment costs outlined above have created a barrier to private market to reuse this property.
<br />BACKGROUND (Tax Increment Financing)
<br />Because of the significant redevelopment costs identified above, Staff (along with our professional advisors) have
<br />identified a "Renovation & Renewal TIF District" as an applicable incentive. This tool would allow the City to
<br />capture 15 years of tax increment from the construction of Expansion #1 and redirect said dollars to the
<br />redevelopment of the Health Quest Property. It is estimated about $350,000 could be captured over 15 years
<br />($220,000 present value based on 5.5% interest).
<br />For more information on TIF, please see the attached LMC TIF Information document (Section E, pages 15-19).
<br />Also attached is State Statute related to a Renovation & Renewal District. The purpose of this case is to begin the
<br />legal public process, as guided by State Statute, to establish a TIF District. The purpose of this case is not to
<br />"award" TIF to Life Fitness. However, this case begins the process to "allow" the City to award TIF to Life Fitness
<br />in the future. Attached is a timeline for the establishment of a TIF District.
<br />BACKGROUND (DEED, Job Creation Fund (JCF))
<br />The State of Minnesota, Department of Employment and Economic Development, has indicated this proposed
<br />project would qualify for JCF dollars. JCF awards are provided based on two performance measurements: (1) job
<br />creation and (2) capital investment. Based on conversations with DEED Staff, it is anticipated this project could
<br />receive $200,000+ from the State. The first step in this process is to apply --attached is an application.
<br />It should be noted, private businesses cannot directly apply for DEED incentives. DEED requires a local
<br />municipality to apply on behalf of the benefiting business.
<br />For more information on the State JCF program, please visit this link:
<br />http://mn.gov/deed/business/financing-business/deed-programs/job-creation-fund.j sp.
<br />BACKGROUND (Why would Ramsey consider incentives?)
<br />
|