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Memo <br />To: Patrick Brama, Economic Development Manager/ <br />Assistant City Administrator <br />From: Jason Aarsvold, Ehlers <br />Date: June 1, 2017 <br />Subject: Analysis of Request for Assistance — PSD, LLC Business Park <br />The City received a proposal from PSD, LLC to develop a business park on property located <br />south of Bunker Lake Boulevard between Puma St. and Armstrong Blvd. At full build -out in its <br />first phase, PSD anticipates a business park that includes 4 buildings of approximately 60,000 <br />square feet each. The first 60,000 square foot building would start construction immediately as a <br />speculative venture without a tenant in place and be completed in 2018. <br />Citing the high costs associated with developing the property, the higher building quality, and <br />market risk, the developer is requesting nine (9) years of Tax Increment Financing (TIF) <br />assistance from the City. Nine years is the maximum duration for an economic development <br />district and we estimate the district would generate $234,000 in present value, or $300,000 in <br />total value over the life of the district. This memo evaluates the need for TIF assistance based <br />on our analysis of the developer's project budget and projections, generally known as a pro <br />forma. <br />Ehlers conducted a thorough review of the developer's budget and operating pro forma to <br />ensure all development costs, anticipated revenues, and expenditures are represented <br />appropriately. The table below depicts the proposed sources and uses for the project. <br />(SOURCES <br />Developer Financing - 1st Mortgage <br />Developer Equity <br />City of Ramsey Infrastructure Contribution <br />TOTAL SOURCES <br />Acquisition Costs <br />Construction Costs <br />Professional Services <br />Financing Costs <br />Developer Fee <br />TOTAL USES <br />4,215,202 <br />1,053,800 <br />250,000 <br />5,519,002 <br />76.38% <br />19.09% <br />4.53% <br />100.00% <br />• unt % of Cost Per Bldg. Sq. Ft. <br />228,690 <br />4,546,300 <br />450,000 <br />94,012 <br />200,000 <br />5,519,002 <br />4.14% <br />82.38% <br />8.15% <br />1.70% <br />3.62% <br />100.00% <br />4 <br />76 <br />8 <br />2 <br />3 <br />92 <br />vvww.ehlers-inc.ccm <br />EHLERS <br />-r_ LEADERS IN PUBLIC FINANCE <br />Minnesota <br />Offices also in Wisconsin and Illinois <br />phone 651-697-8500 3060 Centre Pointe Drive <br />fax 651-697-8555 Rosevile, MN 55113-1122 <br />toil free 800-552-1171 <br />