Agenda - Economic Development Authority - 08/14/2025

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4. 1. Economic Development Authority (EDA) Meeting Date: 08/14/2025 Primary Strategic Plan Initiative: Promote economic growth and development. Title: Consider Recommendation to Provide Business Assistance to Zero Zone Purpose/Background: The purpose of this case is to review the request by Zero Zone for financial assistance relating to their proposed 55,000 square foot expansion here in Ramsey. Zero Zone Refrigeration is a growing company. In 2021, Zero Zone expanded its manufacturing operations in Dyersville Iowa with critical support provided by the Iowa Economic Development team. Ramsey was looked at for this investment but difficult workforce conditions at that time and the incentive package offered by Iowa lead to the decision to invest in Iowa. Since 2021, Zero Zone, with the assistance of City Staff, has worked with the Workforce Center and Anoka Area Chamber and has solved its workforce deficit and is confident that Ramsey and the surrounding communities have enough workers to strongly consider an 11 Million dollar investment in Ramsey. Zero Zone is requesting $360,000 in Pay -Go TIF Note with 6% Interest to assist with TIF-eligible site costs. Zero Zone is also requesting state incentives (MIF, JCF) that would be managed by the City to assist with the construction of the building, purchase of machinery and equipment and job creation. The State incentives would need to also be approved separately by the City Council Zero Zone acquired Systematic Refrigeration in 2002 here in Ramsey. In February 2007, the company acquired an adjacent site from the City of Ramsey where the proposed expansion will occur for $440,000. The proposed 55,000 square foot expansion on this site will result in the creation of 55-70 new jobs with starting wages exceeding $21.00/hr. Based on analysis by the City and Anoka County the 55,000 SF expansion will add $5,222,400 in taxable value which will result in $150,320 new taxes annually. Approximately 54,000 of the new taxes generated will be captured as TIF under the current proposal and will be paid to Zero Zone in the form of a TIF note for a period of 9 years. For clarification purposes, Zero Zone will pay the full taxes and the TIF payments will be provided a year afterward as a reimbursement for eligible project costs. This project is exactly what economic development is all about; helping an existing business expand and flourish in Ramsey. Notification: None is required for this action. A Public Hearing will be required at a later date to consider a Business Subsidy Agreement if the assitance package moves forward. Time Frame/Observations/Alternatives: Staff has worked with Phil Anderson from Zero Zone to obtain a complete Business Assistance Application. Staff has reviewed and scored the application. Zero Zone has provided the $5,000 Application Fee. The Application scored 32 out of 35 which is a very high score supporting the goals set forth by the City Council and EDA the support increased tax base, creation of new living wage jobs (55) and supporting the expansion of existing Ramsey businesses. Staff works with Ehlers to get a 3rd party review of the assistance request to determine if the assistance request is warranted and to fine tune the TIF projections. Jason Aarsvold from Ehler's will be in attendance to go over findings from the memo attached to this case and to answer questions. A summary of the Ehlers Memo, which supports providing assistance to this project is below: Based on the total development costs and assumed financing for this project, we estimate a business (like Zero Zone) would need to pay a blended lease rate of approximately $10.15 per square foot without any assistance for a developer to achieve an average 7percent YOC return for this project over 9 years (the anticipated term of tax increment payments). We estimate that a blended market lease rate for Ramsey is in the $7.50 to $9.50 per square foot range.