Agenda - Economic Development Authority - 02/08/2024

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H �L� RS F L C'UB I� FINE Afv101' MEMORANDUM TO: Sean Sullivan, Economic Development Manager FROM: Jason Aarsvold, Ehlers DATE: January 31, 2024 SUBJECT: Medart Financial Assistance Request The City of Ramsey (the "City") received a request for financial assistance from Medart, Inc. for construction of a new facility located at Bunker Lake Blvd. and Puma Drive. Medart proposes construction of an approximately 105,000 square foot warehouse/distribution facility. The project is expected to add 43 additional employees in the City with wages of $18.00 to $21.00 per hour or more. Some of these jobs will be transferred from another facility within Minnesota but qualify as new jobs created in Ramsey for purposes of determining this business subsidy. Medart is requesting $1.5 million in total tax increment assistance from the City to help offset project costs and to make the Ramsey site competitive with less expensive location alternatives. This is a present value of $1,157,000 assuming a 5% interest rate. The project is eligible for inclusion in a 9-year economic development TIF district since it is primarily a warehouse / distribution use. The purpose of this memorandum is to provide a summary of Ehlers' analysis and recommendation for TIF support related to Medart's request. TIF Projection Based on current projections, a $1.5 million TIF note (with 0% interest) could be repaid within the full 9-year duration of a new TIF district. This assumes a project valued at just over $12.5 million ($119 sq. ft.), pursuant to an estimate provided by the County Assessor. This also assumes that the fiscal disparities portion of Medart's taxes are captured as TIF and available for payment on the note. When a new TIF district is created, the City has the option to determine whether or not it will capture the fiscal disparities (FD) portion of the taxes for the development. If the City elects to capture the FD portion of the tax (known as the "a" election), there is more TIF available for the development. There will, however, be a tax impact to the remaining taxpayers since the City still needs to pay the FD portion of taxes to the State. If the City elects to not capture the FD portion of the tax (known as "b" election), there will be less TIF available for the development, but no impact to the other taxpayers in the City. For purposes of this analysis, we have assumed the "a" election to maximize the amount of TIF available for the development. This adds approximately $399,000 in available assistance. To estimate how this would impact other taxpayers, we determine how much the City's tax rate would have to increase to capture the same amount of FD portion of taxes to pay into the State pool. Based on the preliminary pay 2024 levy and total tax capacity of the City, we estimate the BUILDING COMMUNITIES. IT'S WHAT WE DO. �7 infoCehlers-inc.com 1 (800)552-1171 www.ehiers-inc.com