Agenda - Economic Development Authority - 02/08/2024

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H �L� RS PUBLIC FINANC1. , �, City's tax rate would need to increase by 0.062% to make up for tax capacity captured as TIF in the "a" election scenario. This increase means the median value home in Ramsey ($350,100) would have a tax bill that was $2.08 higher annually. Pro Forma Analysis Since the facility will be owned by the company, this analysis treats the Medart project as an independent income producing real estate venture that might be built by a third party (developer) and leased back to the business. In this scenario, we explored whether the project costs and end sources of funds (rent paid by the business) would meet typical market returns to attract private financing from a bank and developer equity. From this analysis, we conclude TIF assistance up to $1.5 million ($1.157 million present value) is justified for the project. The table below shows the proposed sources and uses of funds without any assistance and with the recommended level of assistance. FMAmount Pct. Amount Pct. Developer Financing- 1 st Mortgage 87205,421 70.00% 81205,421 70.00% Developer Financing-TIF 1,1575031 9.87% 0 0.00% Developer Equity 2,359578 20.13% 3,516,609 30.00% TOTAL SOURCES 1137229030 100.00% 1197229030 100.00% Amount %of Cost Amount %of Cost Acquisition Costs 21689,830 22.95% 276897830 22.95% Construction Costs/Site Work 71472,000 63.74% 71472,000 63.74% Financing Costs Prof. Services 0 0.00% 0 0.00% Site Improvements 1,560,200 13.31% 11560,200 13.31% Machinery and Equipment 0 0.00% 0 0.00% TOTAL USES 113722,030 100.00% 111722,030 100.00% If this project were to be delivered by a developer on a for-lease basis to Medart in the current market, the developer may be expected to provide 30 percent equity to obtain debt financing for the remaining 70 percent of project costs. This is the assumption used in the analysis and included on the table above. A developer building a project like this for lease back to a tenant would anticipate receiving a 10 percent Cash-on-Cash ("COC") return. A COC rate of return is simply the annual net cashflow from the project (after expenses and debt service) divided by the initial equity investment. A 10 percent COC is standard for this type of project. Based on the total development costs and proposed financing for this project, we estimate a business (like Medart) would need to pay a blended lease rate of approximately $9.70 per square foot without any assistance for a developer to achieve an average 10 percent COC return for this BUILDING COMMUNITIES. IT'S WHAT WE DO. �7 infoCehlers-inc.com 1 (800)552-1171 www.ehiers-inc.com