Agenda - Economic Development Authority - 04/13/2017

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Economic Development Authority (EDA) 4. 1. Meeting Date: 04/13/2017 Submitted For: Patrick Brama,Administrative Services By: Patrick Brama,Administrative Services Title: PSD LLC Business Park Proposal: Accept Business Subsidy Request Application and Call for Public Hearing Purpose/Background: PURPOSE Consider multiple actions related to the PSD LLC business park proposal. For a detailed outline of future steps, please see the attached schedule. STEP I (this case): formally accept a business subsidy application from PSD LLC and begin process to establish a new TIF district.. The purpose of this case is not to "award" any financial incentives to PSD LLC. However,this case begins the State required public process to "allow"the City to award financial incentives to PSD LLC. STEP 2 (future case): review underwriting of project pro-forma, consider authorization to establish a new TIF district, and consider awarding TIF agreement/business subsidy agreement(which will include a specific amount of TIF). BACKGROUND (project) Please see attached background document for details. In summary,the proposed project includes two major components: (A)the purchase of 45 acres of land from Hageman Holdings for a new business park development. PSD LLC has completed concept master plans for this 45-acre site,which show roughly seven 60,000 square foot commercial/industrial buildings. To kick off the business park project, and put it in a strong position moving forward, PSD LLC intends to immediately complete several master site improvements (master developer). The estimated total cost for this step is $4.24M(includes: property acquisition,moving large soil mound, creating berm,mass grading, regional storm water pond,grubbing, debris/dump clean up, internal public road, and signage). (B) within the larger 45-acre project, PSD LLC plans to immediately construct their first individual building, a 60,000 square foot speculative industrial building. PSD LLC is proposing a high-quality,highly functional, and market relevant building;which will include: 24' clear ceilings (potentially 30'),both drive-in garages and sub-grade docks for every tenant, and glass facades along Highway 10. The estimated total cost for PSD LLC's first building is $5.49M. BACKGROUND (subsidy request) PSD LLC has asked the City for financial incentives related to both items above (A and B). Specifically,PSD LLC is requesting the City construct the first phase of the public road, as part of the mass site improvements ($200K-$250K, or 4.7%-5.9%). Secondly, PSD LLC is requesting the City provide 9 years of TIF for the their first speculative industrial building ($277K PV, or 5%). Based on their modeling and project pro-forma,PSD LLC believes both requests are needed,in order to make this project work.