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' EHLERS LEADERS IN PUBLIC FINANCE Memo To: Sean Sullivan, Economic Development Manager From: Jason Aarsvold, Ehlers Date: 1-4-2023 Subject: Home2 Suites—Request for Assistance The City of Ramsey received a request for assistance to construct a 98 room Home2 Suites within the COR area on City-owned land. The developer is requesting the City write-down the cost of the land to $1 and provide a pay-as-you-go (PAYGO) TIF note in the amount of $550,000 to make the project financially feasible. You requested that Ehlers review the developer's proposal to determine whether the request is reasonable and within industry standards. Ehlers conducted a thorough review of the developer's budget and operating pro forma to ensure all development costs, anticipated revenues, and expenditures were represented appropriately. The table below depicts the sources and uses of funds for the project as proposed by the developer. SOURCES First Mortgage 12,145,250 66.5% 123,931 TIF PAYGO Note 550,000 3.0% 5,612 Developer Equity 5,555,239 30.4% 56,686 TOTAL SOURCES 18,250,489 100% 186,229 USES MENINEFTN- .. Acquisition Costs 1 0.0% 0 Construction Costs 14,023,063 76.8% 143,092 Permits/Fees 88,200 0.5% 900 Furniture, Fixtures, & Equipment 2,187,360 12.0% 22,320 Professional Services 497,500 2.7% 5,077 Financing Costs 536,209 2.9% 5,472 Developer Fee 373,698 2.0% 3,813 Cash Accounts/Escrows 544,458 3.0% 5,556 TOTAL USES 18,250,489 100% 186,229 Analysis Generally, this project meets the expectations of a limited service, or upper midscale, hotel project as it relates to the financing structure, projected revenues, developer fee, and on-going operational costs. Following are our findings from the analysis completed for the project: BUILDING COMMUNITIES. IT'S WHAT WE DO. w] info@ehlers-inc,com '�, 1(800)552-1171 (Q www.ehlers-inc,com