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1�1�1im�� <br />�I�I�Ia!A!A;i"rB <br />IIIIIIIII III I III II.. I <br />To: Sean Sullivan, Economic Development Manager <br />From: Jason Aarsvold, Ehlers <br />ate: 5-30-19 <br />Subject: Delta ModTech TIF request <br />The City of Ramsey requested that Ehlers review the Tax Increment Financing (TIF) <br />request from Delta ModTech for their proposal to construct an approximately 210,000 <br />square foot manufacturing facility along Bunker Lake Blvd. just east of Puma Street. If <br />approved, the project is expected to commence in 2019 and be complete in 2020. <br />Delta ModTech is requesting $1.5 million in tax increment assistance. The project meets <br />the requirements necessary for the City to establish a 9-year Economic Development TIF <br />district. Based on our estimates, the project is expected to generate a total of <br />approximately $972,000 in tax increment over the 9-year life of the district. Therefore, <br />the maximum amount of any TIF assistance should be limited to the $972,000 projected. <br />The purpose of this memorandum is to evaluate whether the avialable assistance for <br />Delta ModTech's project is necessary for financial feasibility in comparison to typical <br />market -based expectations and alternative investment options available to the company. <br />This is commonly referred to as meeting the "but for" test, which means the project would <br />not occur on this site "but for" the public assistance being provided. <br />"But For" Test <br />As the company evaluated potential locations to invest in this new facility, it was <br />considering alternative investment options outside Ramsey. The business indicated that <br />local assistance was necessary to make investment at this location financially feasible. <br />Based on our discussions with the company, we were able to conclude that Delta <br />ModTech was not likely to make this current investment at the City's location without <br />some outside assistance. <br />While this conclusion generally meets the "but for" test, we believe it's good policy to <br />subject these requests to a more rigorous analysis to determine whether the level <br />assistance is necessary for financial feasibility. For this reason, we took a second <br />approach to analyzing the request. <br />The second approach to the "but for" analysis treats this project as an independent <br />income producing real estate venture that might be built by a third party (developer) and <br />leased back to Delta ModTech. In this scenario, we explored whether the project costs <br />F. LYII.DIN(. CC�)IM'aMuNITIIHS. IT"S WHIAT WE DO. Inl-o ehler„-inc,corn <br />1 (80CY) www.ehler,-inc,corn <br />