Agenda - Economic Development Authority - 06/08/2017

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Economic Development Authority (EDA) Meeting Date: 06/08/2017 Submitted For: Patrick Brama, Administrative Services By: Patrick Brama, Administrative Services 4. 4. Title: PSD LLC Business Park: Establish TIF District 16 and Approve TIF Agreement (Building #1) Purpose/Background: ***this case is 2 of 3 cases related to the new PSD business park*** PURPOSE Consider multiple actions regarding the PSD LLC TIF Assistance Application which was accepted by the EDA and City Council in April. This request is specifically related to PSD's proposed 60,000 square foot speculative Industrial (Building #1). (1) TIF PLAN: Consider Support of the attached Resolution #17-06-131 to Modify Development District 1, Establish TIF District 16, and adopt TIF District 16 Plan. This step does not award TIF. This step allows the City to award TIF (and provides a not -to -exceed budget number, which is higher than what the city is awarding to PSD). Attached to this case is a TIF Plan Summary --Staff recommends the Council concentrate their time on this document. - -and-- (2) TIF AGREEMENT: Consider support of the attached Resolution #17-06-132 authorizing execution of a TIF Agreement. This is the actual TIF award for PSD LLC ($234,595 PV @ 4.75%). This document includes all terms and conditions for this specific deal. - -and-- (3) INTER FUND LOAN: Consider support of the attached Resolution #17-06-133 which establishes an "ability" for the City to utilize an inter fund loan to pay for up front administrative/ legal costs associated with TIF District #16; and repay said inter fund loan with TIF District #16 proceeds (i.e. future PSD LLC increment). BACKGROUND (project) Please see attached background (background, maps, and renderings) document for greater context. Regarding this project specifically, PSD LLC plans to immediately construct 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, 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 this 60,000 square foot speculative building (building #1). Specifically, PSD LLC is requesting the City provide 9-years of pay -go TIF ($234,595 PV @ 4%). Based on their modeling and project pro -forma, PSD LLC believes this assistance is needed, in order to make this project work. PSD has indicated there will be a multi -year tenant buildup period (i.e. there will be high vacancy rates for the first 2-3 years) which makes this project very risky. To see PSD's original request letter, please reference the April EDA case.