Agenda - Economic Development Authority - 08/12/2021

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405,000 square foot for manufacturing and warehousing. The County Assessor has estimated the following values for each of the 3 buildings: Building 1 - 8.9M Building 2 - 11.2M Building 3 - 11.5M BACKGROUND (subsidy request) The Developer has asked the City for public financial incentives related to both items above in relation to the project (A and B). The Developer is requesting the City provide 9 years of pay-as-you-go (PayGo) TIF for the development of 405,000 square foot buildings and land purchase. Based on their modeling and project pro -forma, the Developer believes financial assistance is needed, in order to make this project work. At the July 8 EDA meeting the EDA reviewed project benefits and underwriting of project pro -forma by Ehlers (a third party source) and determine if the business subsidy amount was appropriate. This process evaluated the "But For Test" and the return on investment by the Developer to determine if providing assistance is necessary and appropriate and ensure it is within industry standards (not unduly enriching the developer). Projected cash on cost return on investment for the Developer is 6.72% which falls within the industry standard of 6.5-7%. The analysis by Ehlers concludes that the $1,172,000 in proposed City assistance does not unduly enrich the company. The Developer has provided $10,000 for the TIF Application and to assist in the legal fees associated with creation of the TIF District and TIF Plan. Staff reviewed and scored the application. The application scores a 30 out of 35 which is a moderate to high score. The application states that this project will bring approximately 100-150 jobs to Ramsey upon completion of the of construction and opening of the new building paying wages of at least $17.45 per hour. In total, this project will likely result in at least 100 new, good paying jobs in Ramsey within the first few years. The estimated tax assessed value of the completed project is $31.6 Million Dollars and it is expected to generate in excess $1M in total property taxes annually. Attached to this case is the Business Assistance Application and Policy for reference. Notification: N/A for the EDA. However the Public Hearing will be properly noticed for the August 24, 2021 City Council Meeting. Observations/Alternatives: Project Benefits Summary • 100-150 new jobs for the City of Ramsey. 100 new jobs are anticipated to be created paying a minimum wage of at least $17.50 per hour excluding benefits. • Opportunity for employment 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 September 2021. • 42.7 Million Dollar project investment. • $1M in annual property taxes after project is completed. The newly created local tax revenue will be captured by the TIF District 18 for 9 years. When the district is decertified, the City can expect to receive around $400,000 annually in property taxes (including fiscal disparities) from this project. • The proposed 405,000 square foot manufacturing buildings are high -quality and market relevant. This industrial complex will be the largest in Ramsey and be a significant investment for the City's new Bunker Lake Industrial Park. • The proposed funding sources for the subsidy request would be from a newly created TIF District 18. Meaning, this subsidy will not have a direct impact on the existing general tax levy and Ramsey taxpayers. Also, like any TIF project, the existing tax base remains in place, 100%. • The proposed $1,172,000 in Tax Increment Financing will be through a PayGo Note (pay as you go) at 4.5% interest rather than "up -front" financing or bonding. The Developer will receive 60% of the TIF generated by