Agenda - Council Work Session - 06/25/2019

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* 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 ModTech project (A and B). Specifically, the Developer originally requested $1,500,000 in Tax Increment Financing/Assistance to assist with eligible project costs. See analysis below outlining Staff recommendation of $972,000. The Developer has accepted Staffs recommendation. 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 ModTech. 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 for the Delta ModTech site (not the future development area). 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 TIF Assistance. The Developer has completed and submitted a business subsidy application, including a 0,000 non-refundable fee to establish a project escrow. Staff has reviewed and scored the application. The on scores a 33 out of 35 which is a moderate to high score. The application states that this project will b +proximately 120 jobs to Ramsey upon completion of the of construction and opening of the new buildinTaddition, 15 or more new jobs will be created within 2.5 years of executing the TIF Agreement, paying wa o 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 l�and it is expected to generate in excess $375,000 in total property taxes annually. Attached to this case is h usiness Assistance Application and Policy for review. Ehlers has reviewed the updated request and has de ined that is satisfies the "But -For" test and has conducted financial analysis determining that $972,000 in t ce and the return on investment for the Developer is within industry standards and does not unduly enrich V ► -veloper. * NOTE newly created job commitment by de Nor for TIF Agreement has been reduced from 20 to 15 jobs. The wage level of the new jobs still re $22.00 per hour. This project will ultimately result in 135 new jobs for Ramsey. Notification: Both the the Anoka Hennepin Sch ollstrict and Anoka County have been notified of this action, as required by Statute. The Public Hearing ha properly noticed and a copy of the notice has been attached to this case. Observations/Alternati , 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 Delta ModTech 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. Delta ModTech is a growing company that will be providing employment opportunities for Ramsey Residents. • Payment of pro -rated share 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 project investment (building plus site improvements). • $375,000 in additional annual property taxes kicks in 1.5 years after project is completed. The newly created local tax revenue will be captured by the TIF District 17 for 9 years (as allowed for Economic Development TIF Districts). When the district is decertified, the City can expect to receive around $90,000 annually in property taxes (including fiscal disparities) from this project. • The proposed 210,000 square foot manufacturing building is high -quality and market relevant. It will be one of the largest industrial buildings in Ramsey and be a significant investment for the City's new Bunker Lake