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Memo <br />To: Patrick Brama, Economic Development Manager/ <br />Assistant City Administrator <br />From: Jason Aarsvold, Ehlers <br />Date: July 12, 2017 <br />Subject: Analysis of Request for Assistance — PSD, LLC — Adrenaline Sports <br />Center <br />The City received a proposal from PSD, LLC (the "Developer") to develop a business <br />park on property located south of Bunker Lake Boulevard between Puma St. and <br />Armstrong Blvd. At full build -out in its first phase, PSD anticipates a business park that <br />includes 4 buildings of approximately 60,000 square feet each. PSD proposes to <br />develop one of these buildings primarily for Adrenaline Sports Center. Adrenaline <br />would occupy approximately 56,000 square feet of the 64,000 square foot building. The <br />remaining space would be available for lease to other tenants. <br />Citing the high costs associated with developing the property, the higher building <br />quality, the reduced rent potential from Adrenaline Sports Center and the risk <br />associated with the project, the developer is requesting $250,000 from the city to make <br />the project financially feasible. The project is not a qualified use within an economic <br />development tax increment financing (TIF) district. Therefore, TIF cannot be used for <br />this project. Instead, the City identified existing economic development funds that could <br />be used to finance the project. <br />As proposed, the City would pay this assistance over a three-year period, commencing <br />one year after the project is complete. This means that payments of $83,333 per year <br />would be made beginning 2019 through 2021 based on the current project schedule. <br />This memo evaluates the need for City assistance based on our analysis of the <br />developer's project budget and projections, generally known as a pro forma. Ehlers <br />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 />www.ehlers-inc.ccm <br />EHLERS <br />-F 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 />