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MEMORANDUM <br />TO: <br />FROM: <br />DATE: <br />SUBJECT: <br />ligS <br />...EHLERS <br />ii. PUBLIC FINANCE ADVISORS <br />Sean Sullivan, Economic Development Manager <br />Jason Aarsvold, Ehlers <br />August 5, 2025 <br />Zero Zone Refrigeration Financial Assistance Request <br />The City of Ramsey (the "City") received a request for financial assistance from Zero Zone <br />Refrigeration for expansion of its facility located at 6151 140th Ave. NW. Zero Zone proposes a <br />55,000 square foot expansion of its existing building. The project is expected to add 55 <br />additional employes with average wages of $21 per hour. <br />Zero Zone is requesting up to $500,000 in City tax increment financing for the project. Based on <br />current estimates, the project is only expected to generate $360,000 in present value (assuming <br />6% interest) over the full 9-year life of an economic development district. For this analysis, we are <br />assuming the project receives only the $360,000 projected from a new TIF district. <br />The purpose of this memorandum is to evaluate whether Zero Zone's request is necessary for <br />financial feasibility. Since this facility will be owned by the company, this analysis treats the Zero <br />Zone project as an independent income producing real estate venture that might be built by a <br />third party (developer) and leased back to the business. In this scenario, we explored whether the <br />project costs and end sources of funds (rent paid by the business) would meet typical market <br />returns to attract private financing from a bank and developer equity. <br />If this project were to be delivered by a developer on a for -lease basis to Zero Zone, the developer <br />may be expected to provide 25 percent equity to obtain debt financing for the remaining 75 <br />percent of project costs. A developer building a project like this for lease back to a tenant would <br />anticipate receiving at least a 7 percent yield on cost ("YOC") return. A YOC rate of return is <br />simply the project's net operating income divided by the total development costs. The table <br />below compares the sources and uses for the project as proposed without any City assistance to a <br />version that does include the anticipated assistance. <br />SOURCES <br />WITH ASSISTANCE WITHOUT ASSISTANCE <br />Developer Financing - 1st Mortgage <br />Developer Financing - TIF <br />Developer Equity <br />TOTAL SOURCES <br />Amount <br />6,472,342 <br />360,000 <br />1,797,447 <br />8,629,790 <br />Pct. <br />75.00% <br />4.17% <br />20.83% <br />100.00% <br />Amount <br />6,472,342 <br />0 <br />2,157, 447 <br />8,629,790 <br />Pct. <br />75.00% <br />0.00% <br />25.00% <br />100.00% <br />USES <br />Acquisition Costs <br />Construction Costs / Site Work <br />Financing Costs Prof. Services <br />Site Improvements <br />City Fees <br />TOTAL USES <br />Amount <br />0 <br />8,036,574 <br />310,924 <br />196,875 <br />85,417 <br />8,629,790 <br />i° or Lost <br />0.00% <br />93.13% <br />3.60% <br />2.28% <br />0.99% <br />100.00% <br />Amount <br />0 <br />8,036,574 <br />310,924 <br />196,875 <br />85,417 <br />8,629,790 <br />i° or lost <br />0.00% <br />93.13% <br />3.60% <br />2.28% <br />0.99% <br />100.00% <br />BUILDING COMMUNITIES. IT'S WHAT WE DO. <br />info@ehlers-Inc.com 1 (800) 552-1171 <br />www.ehlers-inc.com <br />