Agenda - Economic Development Authority - 06/13/2019

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(B) within the larger 43-acre parcel, the Developer desires to plat 16.03 acres to construct a 210,000 square foot manufacturing building to lease to Delta Mod Tech. The estimated total cost for the Delta ModTech first building is $16M. * NOTE This new building size is 25,000 more square feet than originally proposed. BACKGROUND (subsidy request) The Developer has asked the City for public financial incentives related to both items above in relation to the Delta Mod Tech project (A and B). Specifically, the Developer originally requested $1.500,000 in Tax Increment Financing/Assistance to assist with eligible project costs. The Developer is requesting the City provide 9 years of pay-as-you-go (PayGo) TIF for the 210,000 square foot building and lot to be leased to Delta Mod Tech. Based on their modeling and project pro -forma, the Developer believes financial assistance is needed, in order to make this project work. Based on City and analysis by Ehlers, City Staff has communicated that it is willing to support $972,000 in pay-as-you-go TIF assistance to write down the cost of the land acquisition. This has been communicated to the Developer and they wish to move forward with a request of $972,000. TIF runs conducted by Ehlers and City Staff support this level of assistance. The Developer has completed and submitted a business subsidy application to staff, including a $10,000 non-refundable fee to establish an project escrow. Staff has reviewed and scored the application. The application scores a 33 out of 35 which is a moderate to high score. The application states that this project will bring approximately 120 jobs to Ramsey upon completion of the of construction and opening of the new building. In addition, 15 or more new jobs will be created within 2.5 years of executing the TIF agreement, paying wages of at least $22.00 per hour. In total, this project will result in at least 135 new, good paying jobs in Ramsey. The estimated tax assessed value of the completed project is $11.1 Million Dollars and it is expected to generate in excess $375.000 in total property taxes annually. Attached to this case is the Business Assistance Application and Policy for review. Ehlers has reviewed the updated request and has determined that is satisfies the "But -For" test and has conducted financial analysis determining that $972,000 in assistance and the return on investment for the Developer is within industry standards and does not unduly enrich the Developer. * NOTE newly created job commitment by developer for TIF Agreement has been reduced from 20 to 15 jobs. The wage level of the new jobs still remains at $22.00 per hour. This project will ultimately result in 135 new jobs for Ramsey. Notification: Notification is not required for EDA review. A Public Hearing has been scheduled for the June 25, 2019 City Council, and the proper Notice of Public Hearing was published in the City's Official Newsletter, the Anoka County UnionHerald. Observations/Alternatives: Project Benefits Summary • 135 new jobs for the City of Ramsey. 120 jobs will be retained and relocated to Ramsey from a neighboring community by DeltaModTech and an additional 15 jobs will be created paying a minimum wage of at least $22.00 per hour. • Opportunity for employment for Ramsey Residents. DeltaModTech is a growing company that will be providing employment opportunities for Ramsey Residents. • Payment of required outstanding 2011 and 2017 special assessments for the extension of Bunker Lake Boulevard and City Utilities (Bunker Lake Business Park / Puma Street) attributable to the developed parcel will be made at time of proposed property closing in July 2019. • 19.65 Million Dollar project investment. • $375.000 in annual property taxes 1.5 years after project is completed. The newly created local tax revenue will be captured by the TIF District 17 for 9 years. When the district is decertified, the City can expect to receive around $90,000 annually in property taxes (including fiscal disparities) from this project.