The purpose of this case is to review the request by Zero Zone Refrigeration (Zero Zone) for financial assistance relating to their proposed 55,000 square foot expansion here in Ramsey and to provide support, but not formal approval.(would come at a later date) Zero Zone 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 found some solutions with 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 at a later date but a resolution of support is needed to submit an application to the MIF and JCF Programs.

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.

None is required for this action.  A Public Hearing will be required at a later date to consider a Business Subsidy Agreement if the assistance package moves forward.

Staff has worked with Phil Peterson 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 7 percent 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.
 
This analysis indicates Zero Zone would need to pay a lease rate that is higher than the market rate to occupy the property, demonstrating assistance for the project may be warranted. If we assume a developer receives $360,000 in TIF assistance, Zero Zone would need to pay a lease rate of approximately $9.20 per square foot for the developer to achieve an average 7 percent YOC return for this project within 9 years. This is within the higher end of the assumed market lease rate. Therefore, if the City chooses to provide $360,000 in TIF assistance, we believe it will help facilitate the project and not unduly enrich the applicant.

Staff is asking the EDA to review the request for Tax Increment Financing by Zero Zone.  Below is a draft schedule outlining the meeting actions and dates required to provide the Tax Increment Financing:
 

August 14, 2025	EDA meets at 7:30 a.m. to consider TIF request and makes recommendation to City Council
August 26, 2025	City Council meets at 7:00 p.m. to consider TIF request and call for a public hearing establishing the TIF District and to adopt Resolutions supporting applications to MIF/JCF
August 27, 2025	Project information, property identification numbers, fiscal impacts and maps sent to Ehlers for drafting documentation.    Ehlers confirms whether building permits have been issued on the property to be included in the TIF District.
By September 5, 2025	Ehlers conducts internal review of Plans.
September 12, 2025	Fiscal/economic implications received by School Board Clerk and County Auditor (at least 30 days prior to public hearing) and County receives information for review of county road impacts.  [Ehlers will distribute.]   *The County Board, by law, has 45 days to review the TIF Plan to determine if any county roads will be impacted by the development.  Because City staff believes that the proposed TIF district will not require unplanned county road improvements, the TIF Plan was not forwarded to the County Board 45 days prior to the public hearing.  Please be aware the County Board could claim that tax increment should be used for county roads, even after the public hearing.
September 26, 2025	Publication of hearing notice and map in the Anoka County Union Herald (at least 10 days but not more than 30 days prior to hearing).  [Ehlers will submit notice, map and instructions. Publication deadline: September 23, 2025.]
October 9, 2025	EDA meets at 7:30 AM to consider recommending the Plans in connection with the TIF District. [Attorney provides resolution by October 1, 2025.]
October 14, 2025	City Council holds public hearing at 7:00 PM on the modification to the Development Program for Development District No. 1 and the proposed Establishment of Tax Increment Financing District No. 19 (Zero Zone) and considers a resolution approving the Plans.  [Ehlers and attorney provide packet information October 7, 2025.]   City Council considers approval of TIF agreement.   City considers an Interfund Loan resolution in connection with the TIF District.
October 15, 2025	City may issue building permits.
Before June 30, 2026	Ehlers files the Plans with the MN Department of Revenue, Office of the State Auditor, and requests certification of the TIF District with the County.

Staff will work with Ehlers and TAFT Law to begin work on a TIF Agreement, TIF Plan and Public Notices as required by State Statute if the Council supports the Business Assistance Package. The Action proposed in this case is non-binding but should give the developer confidence to move forward with the project. Resolutions in support of applications to the MIF and JCF report is also required and are attached hereto.

Alternatives Include:
1) Adopt Resolution #25-192 Supporting Terms of a TIF Agreement and Business Subsidy and Calling for a Public Hearing for Zero Zone Refrigeration; subject to City Bond Attorney Review (as presented)
2) Adopt Resolution #25-192 Supporting Terms of a TIF Agreement and Business Subsidy and Calling for a Public Hearing for Zero Zone Refrigeration; subject to City Bond Attorney Review (with changes)
3) Something Else

And;

1) Adopt Resolution #25-200 Supporting Zero Zone Refrigeration, LLC Applying to the Job Creation Fund Program; subject to City Bond Attorney Review (as presented)
2) Adopt Resolution #25-200 Supporting Zero Zone Refrigeration, LLC Applying to the Job Creation Fund Program; subject to City Bond Attorney Review (with changes)
3) Something Else

And;
1) Adopt Resolution #25-204 Approving Submittal of Application to Minnesota Investment Fund; subject to City Bond Attorney and Credit Review (as presented)
2) Adopt Resolution #25-204 Approving Submittal of Application to Minnesota Investment Fund; subject to City Bond Attorney and Credit Review (with changes)
3) Something Else

 

The $5000 Application Fee will be used to pay for a portion of financial analysis and drafting of TIF Documents.  The Financial Assistance of $360,000 plus 6% interest will be funded through property taxes paid by Zero Zone that is captured by the newly created TIF District.

Motion to:

1) Adopt Resolution #25-192 Supporting Terms of a TIF Agreement and Business Subsidy and Calling for a Public Hearing for Zero Zone Refrigeration; subject to City Bond Attorney Review (as presented)

and;

2) Adopt Resolution #25-200 Supporting Zero Zone Refrigeration, LLC Applying to the Job Creation Fund Program; subject to City Bond Attorney Review (as presented)

and;
 
3) Adopt Resolution #25-204 Approving Submittal of Application to Minnesota Investment Fund; subject to City Bond Attorney and Credit Review (as presented)