Agenda - Economic Development Authority - 12/08/2022

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Part 3 The proposed project is a 62,204-squ are-foot (1.43-acre) parcel to be improved with a limited-service, extended-stay lodging facility;the hotel will be associated with a nationally affiliated hotel brand such as Home2 Suites by Hilton.The proposed subject property, which is expected to open on July 1, 2024,will feature 82 rooms.The hotel will also contain the appropriate parking capacity and all necessary back-of- the-house space. The proposed project would offer a pool,free breakfast, laundry facilities, and a fitness center. The owners recently invested in a revision of the plan after hearing from the City of Ramsey of the desire for a "main street" feel along Sunwood Drive. In the family's desire to build community with Ramsey and help develop the next economic opportunities, the owners committed to redesigning their prototype to offer a dual entrance on the North and South of the building, add additional design and windows to the North entrance, and to incorporate more gathering options along the main street for the appeal of the COR's long-term vision of the area. This change created a loss in revenue of 1 room shifting the keys from 83 to 82 and increased the construction and design cost. Part 4 Based on the City's request and recommendation to offer a dual entrance to promote the community and guest pedestrian experience and to provide access for future city development and surrounding amenities,we instructed our design team to make multiple changes. We had to increase the lobby square footage by approximately 50%, and we added significantly more glass than the brand requires to give the Sunwood fagade a primary entrance. This change created a loss in revenue of 1 room shifting the keys from 83 to 82 and increased the construction and design cost. Additionally,the market study is supportive of a higher percentage of queen/queen rooms which also added additional square footage and cost which we believe will better serve the needs of our community, while simultaneously increasing the potential tax revenue to the city. Conservatively, we increased our cost by approximately$500,000-$600,000. Based on these additional unanticipated costs, we are requesting additional support from the City for the land cost as we as site improvements in order to better meet the needs of our community. Our current rate of return calculation and proforma show the risk and slow ramp up of this project due to the slow market penetration and substantial increase in operations costs and forecasted inflation. Our forecasts, independently analyzed, show a below average ADR and occupancy rates in comparison to the industry and specifically lower than the brand average.