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Memo <br />To: Patrick Brama, Economic Development Manager/ <br />Assistant City Administrator <br />From: Jason Aarsvold, Ehlers <br />Date: July 10, 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 56,000 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 $218,000 in present value, or $282,000 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 />Amount <br />Developer Financing - 1st Mortgage 3,889,786 <br />Developer Equity 972,447 <br />TOTAL SOURCES 4,862,233 <br />80.00% <br />20.00% <br />100.00% <br />USES <br />Amount % of Cost Per Bldg. Sq. Ft. <br />Acquisition Costs 454,766 9.35% <br />Construction Costs 3,616,300 74.38% <br />Professional Services 450,000 9.26% <br />Financing Costs 91,166 1.87% <br />Developer Fee 250,000 5.14% <br />TOTAL USES 4,862,232 100.00% <br />$8 <br />$65 <br />$8 <br />$2 <br />$4 <br />$87 <br />vvww.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 />toll free 800-552-1171 <br />