Agenda - Economic Development Authority - 06/08/2017

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restaurant users (via new vehicle trip generation). Project Considerations • This project must be underwritten and must meet Ramsey's business subsidy policies. The PSD LLC request must be justified and must meet State Statute for Business Subsidies. PSD LLC must demonstrate that "but -for" this assistance, they cannot move forward with this project. • The City verifies PSDs subsidy request by reviewing their project pro -forma, to determine if the developer is receiving a reasonable rate of return on their investment. If the developer is making a return greater than market (rate), staff would recommend against the subsidy. If the developer is making a return at or below market (rate), staff could support a project. Additionally, part of the underwriting process is to "verify" the numbers provided by the developer are market relevant (not inflated or understated). • The City does not need to take on this project (i.e. provide a business subsidy). This is an elective initiative. The City could wait for the market to naturally develop the new business park. By taking on this project, we are associating the City with a speculative development. In the event the PSD LLC project isn't successful (i.e. and/or the economy takes a bad turn), it would look unfavorable for the City, and will likely result in opposition from tax payers. • By dedicating TIF funding to this project, one could take the perspective that the City is losing the opportunity to use said funding (i.e. the incremental tax base). However, a counter to that argument is, but for this subsidy, the project would not happen at all (and that increment would not exist). Funding Source: New 9-year TIF District (TIF #16) and $10,000 fee from PSD LLC. Recommendation: STAFF Staff recommends moving forward with this proposed project and supports the motions outlined in this case. Staff believes this project meets several goals outlined within the City's Adopted Strategic Action Plan and EDA Workplan. Please see observations section for benefits and considerations regarding this request. Reminder: this PSD LLC business subsidy request will require the City make an exception to our business subsidy policy, related to the creation of new jobs. EHLERS Ehler's completed the underwriting for this project. Please see the attached Ehlers MEMO. In summary, Ehlers' findings can support moving forward with approving this request. Action: Motion to recommend the City Council: Adopt Resolution #17-06-131 to Modify Development District 1, Establish TIF District 16, and Adopt a Plan for TIF District 16; ; subject to changes by the City Attorney. - -and-- Adopt Resolution #17-06-132 Authorizing Execution of a TIF Agreement; subject to changes by the City Attorney. - -and-- Adopt Resolution #17-06-133 Authorizing the Establishment of an Inter fund Loan for TIF District 16. Attachments