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�EHLERS <br />ii. LEADERS IN PUBLIC FINANCE <br />Memo <br />To: Sean Sullivan, Economic Development Manager <br />From: Jason Aarsvold, Ehlers <br />Date: 1-2-2020 <br />Subject: Cobblestone Hotel — Request for Assistance <br />The City of Ramsey received a request for assistance to construct a 60 room Cobblestone Hotel <br />and Suites project within the COR area on City -owned land. The developer is requesting the <br />City write -down the cost of the land to $1 to make the project financially feasible. <br />You requested that Ehlers review the developer's proposal to determine whether the request is <br />reasonable and within industry standards. Ehlers conducted a thorough review of the <br />developer's budget and operating pro forma to ensure all development costs, anticipated <br />revenues, and expenditures were represented appropriately. The table below depicts the <br />sources and uses of funds for the project as proposed by the developer. <br />First Mortgage <br />Developer Equity <br />TOTAL SOURCES <br />Amount <br />Pct. Per Room <br />5,000,000 <br />2,970,001 <br />62.7% <br />83,333 <br />37.3% 49,500 <br />7,970,001 <br />100% 132,833 <br />Acquisition Costs <br />Construction Costs <br />Furniture, Fixtures, & Equipment <br />Professional Services <br />Financing Costs <br />Developer Fee <br />Cash Accounts/Escrows <br />TOTAL USES <br />1 <br />5,800,000 <br />1,385,000 <br />265,000 <br />170,000 <br />250,000 <br />100,000 <br />Pct. Per Room <br />0.0% <br />72.8% <br />17.4% <br />3.3% <br />2.1% <br />3.1% <br />1.3% <br />0 <br />96,667 <br />23,083 <br />4,417 <br />2,833 <br />4,167 <br />1,667 <br />7,970,001 <br />100% 132,833 <br />Analysis <br />Generally, this project meets the expectations of a limited service, or upper midscale, hotel <br />project regarding the financing structure, projected revenues, developer fee, and on -going <br />operational costs. Following are our findings from the analysis completed for the project: <br />• The Developer proposes to finance the entire hotel project with a combination of equity <br />and debt. The proposed financing includes just over 37% equity and 62.7% debt in the <br />form a first mortgage. For a project of this nature, we would expect to see an equity <br />BUILDING COMMUNITIES. IT'S WHAT WE DO. info@ehlers-inc,com <br />1 (BOO) 552-1171 <br />www.ehlers-inc,com <br />