Agenda - Economic Development Authority - 01/09/2020

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Economic Development Authority (EDA) Meeting Date: 01/09/2020 Submitted For: Sean Sullivan, Community Development By: Sean Sullivan, Community Development 4. 1. Title: Consider Purchase Agreement and Preliminary Tax Increment Financing (TIF) Agreement Structure for Part of Outlot A, COR Stone Brook Academy; Case of Cobblestone Hotel Development, LLC (Portions may be closed to the public) Purpose/Background: The purpose of this case is to consider a proposed Purchase Agreement and Preliminary Tax Increment Financing (TIF) Agreement Structure. This does not approve the proposed project. Traditionally, this step in the process of City Land Sale Transactions only includes consideration for the Purchase Agreement while the TIF Agreement would come at a later date. However, since the TIF Agreement is an integral part of the Land Sale Price, Staff and Ehlers (financial advisor) have done preliminary analysis to determine if assistance in the form of land write -down is warranted. Staff will bring the final version of the TIF Agreement back to the EDA at a future meeting after a more detailed review for formal recommendation to the City Council on the TIF Agreement specifically. Staff is looking for EDA to provide a recommendation on the general terms in order to keep this review moving forward. The City of Ramsey and Cobblestone Hotel Development, LLC have been negotiating the terms of a purchase agreement over the past 6 months. Cobblestone has offered $1.00 to acquire the site needed to construct a 60 Unit, four story hotel, including a restaurant. The proposal would then reimburse the City for the land acquisition through Tax Increment Financing (TIF) Revenue generated by the project. The value of the land is estimated to be between $4.00 and $6.00 per square foot and the lot size is approximately 1.5 acres. Based on this information, the value of the land ranges between $261,360 and $392,040. If the City were to sell the land at a reduced price, it would constitute a business subsidy to the Developer and a Public Hearing and TIF Agreement would be required. The proposed value assigned to the price is within the City's approved deal range for this parcel. The proposed purchase agreement includes a development concept previously reviewed by the EDA and Planning Commission. The lot configuration, as currently presented allows leaves approximately 1.5 acres for a future project to the west that is currently under contract by GiGi's Salon. The time periods and extensions outlined in the term sheet and PA are consistent with the standard template. Notification: Notification is not required. Observations/Alternatives: Observations: The request for a Business Subsidy in the form of a land write -down (reduced sales price) triggers the need for business subsidy analysis. The Anoka County Assessor has preliminarily reviewed the proposed project and has it valued at $4.25M. There are many positive components to construction of a 60 Unit, 4-Story Hotel with Restaurant that address EDA, Council and community goals. They include, but are not necessarily limited to the following. • Estimated Tax Assessed Value $4.25M • Estimated Annual Property Taxes $139,000 • Filling demand for more lodging in the City of Ramsey . High -Quality Full -Service Restaurant