6.2.
CC Regular Session
- Meeting Date:
- 09/22/2015
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Information
Title:
Public Hearing: Consider Multiple Actions Related to a Potential Life Fitness Expansion Project
Purpose/Background:
PURPOSE:
BACKGROUND (Project)
This case was introduced to the EDA and City Council in July; at which time, detailed background information was provided on this project. Detailed background information on TIF was also included is said cases. Attached is the July EDA MEMO.
BACKGROUND (TIF Plan)
Ehler's is managing the process to establish a new TIF district. Attached is an overview/ summary of the proposed district. Also attached is a required resolution. Lastly, attached to this case is the TIF Plan. Again, the purpose of the TIF Plan is to allow the City to award TIF.
It should be noted, the attached TIF Pan includes a "maximum budget." This is a high and conservative total eligible project costs estimation ($1,468,320). This number is different than what is included in the attached TIF Agreement; which is the actual proposed assistance ($224,000 PV terms and $350,000 FV terms). To be clear, the City is not proposing to award $1,468,320 to Life Fitness.
BACKGROUND (TIF Agreement)
This agreement lays out the terms and conditions for the proposed TIF award; including the specific amount of TIF to be awarded. Present Value = $224,000 @ 5% interest over 15 years. Future Value = about $352,000.
This agreement was drafted by Ehlers, via Briggs and Morgan. This agreement is was reviewed by Staff, the City Attorney, the City's economic development consultant Mike Mulrooney, and Life Fitness. Attached to this case is a summary of the TIF Agreement; which provides a quick/ clean overview of the document.
IMPORTANT UPDATE:
This case was reviewed by the EDA on 09/03. Since then, Life Fitness has made a request for two "high-level" items to be adjusted in the attached TIF Agreement.
(1) completion of demolition and site clean up of the health quest property should have a deadline of April 30 2016, rather than November 30, 2015.
(2) the number of required jobs outlined in the attached agreements be adjusted down to "minimum City policy thresholds" to allow room for contingency, in the event Life's originally stated goals are not met. The proposed change is from a minimum 26 new jobs paying $16.85 per hour to a minimum 14 jobs paying $14.34 per hour. Given the current regional/ State issues related to employee recruitment for manufactures, the Life Finesses desire for a contingency becomes more important.
Staff believes the two updates (Life Fitness requests) above are reasonable, and justifiable. Staff believes the merits of this project remain. The Staff recommendation included in this case remains the same.
(1) TIF PLAN: Consider Support of the attached Resolution #15-09-216 to Modify Development District 1, Establish TIF District 15, and adopt TIF District 15 Plan. This step does not award TIF. This step allows the City to award TIF. This step requires the City to hold a public hearing. Attached to this case is a TIF Plan Summary--Staff recommends the Council concentrate their time on this document.
--and--
(2) TIF AGREEMENT: Consider support of the attached Resolution #15-09-242 authorizing execution of a TIF Agreement. This is the actual TIF award for Life Fitness. This document includes all terms and conditions for this specific deal. Attached to this case is a Term Sheet--Staff recommends the Council concentrate their time on this document.
--and--
(3) INTER FUND LOAN: Consider support of the attached Resolution #15-09-239 which establishes an ability for the City to utilize an inter fund loan to pay for up front administrative/ legal costs associated with TIF District #15; and repay said inter fund loan with TIF District #15 proceeds (i.e. future Life Fitness LLC increment).
--and--
(2) TIF AGREEMENT: Consider support of the attached Resolution #15-09-242 authorizing execution of a TIF Agreement. This is the actual TIF award for Life Fitness. This document includes all terms and conditions for this specific deal. Attached to this case is a Term Sheet--Staff recommends the Council concentrate their time on this document.
--and--
(3) INTER FUND LOAN: Consider support of the attached Resolution #15-09-239 which establishes an ability for the City to utilize an inter fund loan to pay for up front administrative/ legal costs associated with TIF District #15; and repay said inter fund loan with TIF District #15 proceeds (i.e. future Life Fitness LLC increment).
BACKGROUND (Project)
This case was introduced to the EDA and City Council in July; at which time, detailed background information was provided on this project. Detailed background information on TIF was also included is said cases. Attached is the July EDA MEMO.
BACKGROUND (TIF Plan)
Ehler's is managing the process to establish a new TIF district. Attached is an overview/ summary of the proposed district. Also attached is a required resolution. Lastly, attached to this case is the TIF Plan. Again, the purpose of the TIF Plan is to allow the City to award TIF.
It should be noted, the attached TIF Pan includes a "maximum budget." This is a high and conservative total eligible project costs estimation ($1,468,320). This number is different than what is included in the attached TIF Agreement; which is the actual proposed assistance ($224,000 PV terms and $350,000 FV terms). To be clear, the City is not proposing to award $1,468,320 to Life Fitness.
BACKGROUND (TIF Agreement)
This agreement lays out the terms and conditions for the proposed TIF award; including the specific amount of TIF to be awarded. Present Value = $224,000 @ 5% interest over 15 years. Future Value = about $352,000.
This agreement was drafted by Ehlers, via Briggs and Morgan. This agreement is was reviewed by Staff, the City Attorney, the City's economic development consultant Mike Mulrooney, and Life Fitness. Attached to this case is a summary of the TIF Agreement; which provides a quick/ clean overview of the document.
IMPORTANT UPDATE:
This case was reviewed by the EDA on 09/03. Since then, Life Fitness has made a request for two "high-level" items to be adjusted in the attached TIF Agreement.
(1) completion of demolition and site clean up of the health quest property should have a deadline of April 30 2016, rather than November 30, 2015.
(2) the number of required jobs outlined in the attached agreements be adjusted down to "minimum City policy thresholds" to allow room for contingency, in the event Life's originally stated goals are not met. The proposed change is from a minimum 26 new jobs paying $16.85 per hour to a minimum 14 jobs paying $14.34 per hour. Given the current regional/ State issues related to employee recruitment for manufactures, the Life Finesses desire for a contingency becomes more important.
NOTE: Life Fitness has 60 job openings at their Ramsey facility today. They still plan on hiring 26 more employees with this expansion (on top of the current 60 job openings). Lastly, Life Fitness has an agreement with the State of Minnesota for this project, which requires the creation of 26 jobs (various different wages). In other words, the State has teeth (incentives) in this project that will ensure the 26 proposed jobs are created.
Staff believes the two updates (Life Fitness requests) above are reasonable, and justifiable. Staff believes the merits of this project remain. The Staff recommendation included in this case remains the same.
Notification:
NA
Observations/Alternatives:
NA
Funding Source:
Tax Increment Financing, pay-as-you-go.
Recommendation:
STAFF:
**This project enhances the City of Ramsey’s economic base by securing the operation of a Fortune 500 company’s manufacturing facility within Ramsey for the foreseeable future. The Life Fitness facility currently generates significant property taxes (about $300,000 annually) and significant jobs (greatest number of jobs in Ramsey, about 300 FT and about 100 PT. Life Fitness is nearly out of space to grow on their existing site in Ramsey.
**By completing the currently proposed project, the City of Ramsey will see significant tax base and job growth into the foreseeable future (Expansion #1 and Expansion #2). Expansion #1 is expected to generate an additional $70,000 in total annual property taxes, and create at least 26 new jobs. Expansion #2 is expected to generate an additional $70,000 in total annual property taxes and create future new jobs.
**With this project, the City would see the removal of a blighted and vacant building located on highly visible intersection.
**This effort accomplishes the Ramsey EDA's three major goals: job creation, tax base creation, and improvement to the quality-of-life within our community.
**By not completing this project, it would be logical for Life Fitness to consider a new, long-term, location for their manufacturing facility. Additionally, the Health Quest property would likely remain in its current state for the foreseeable future.
Staff recommends moving forward with this proposed project; and supporting the motions outlined in this case.
**This project enhances the City of Ramsey’s economic base by securing the operation of a Fortune 500 company’s manufacturing facility within Ramsey for the foreseeable future. The Life Fitness facility currently generates significant property taxes (about $300,000 annually) and significant jobs (greatest number of jobs in Ramsey, about 300 FT and about 100 PT. Life Fitness is nearly out of space to grow on their existing site in Ramsey.
**By completing the currently proposed project, the City of Ramsey will see significant tax base and job growth into the foreseeable future (Expansion #1 and Expansion #2). Expansion #1 is expected to generate an additional $70,000 in total annual property taxes, and create at least 26 new jobs. Expansion #2 is expected to generate an additional $70,000 in total annual property taxes and create future new jobs.
**With this project, the City would see the removal of a blighted and vacant building located on highly visible intersection.
**This effort accomplishes the Ramsey EDA's three major goals: job creation, tax base creation, and improvement to the quality-of-life within our community.
**By not completing this project, it would be logical for Life Fitness to consider a new, long-term, location for their manufacturing facility. Additionally, the Health Quest property would likely remain in its current state for the foreseeable future.
EDA:
The EDA did review this case, and supported Staff's recommendation (the motions included in this case). Please see attached meeting minutes. The EDA did ask Staff a couple questions related to the rationalization of utilizing TIF as a funding source for this project. Please see attached "Why TIF" document for a response.
Action:
Motion to recommend the City Council:
Adopt Resolution #15-09-216 to Modify Development District 1, Establish TIF District 15, and Adopt a Plan for TIF District 15.
--and--
Adopt Resolution #15-09-242 Authorizing Execution of a TIF Agreement; subject to changes by the City Attorney.
--and--
Adopt Resolution #15-09-239 Authorizing the Establishment of an Inter fund Loan for TIF District 15
Adopt Resolution #15-09-216 to Modify Development District 1, Establish TIF District 15, and Adopt a Plan for TIF District 15.
--and--
Adopt Resolution #15-09-242 Authorizing Execution of a TIF Agreement; subject to changes by the City Attorney.
--and--
Adopt Resolution #15-09-239 Authorizing the Establishment of an Inter fund Loan for TIF District 15
Attachments
- RESOLUTION 15 09 216 ADOPTING MODIFICATION OF DEVELOPMENT DISTRICT 1 AND ESTABLISHING TIF DISTRICT 15 AND ADOPTING A TIF PLAN
- RESOLUTION 15 09 239 AUTHORIZING AN INTERFUND LOAN FOR TIF DISTRICT 15
- RESOLUTION 05 09 242 AUTHORIZING EXECUTION OF A TIF AGREEMENT
- TIF Plan (summary)
- TIF Plan (full document)
- TIF Agreement (summary)
- TIF Agreement (full document)
- Why TIF
- July EDA Meeting MEMO
- September EDA Minutes
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Brian Hagen | Tim Gladhill | 09/17/2015 03:13 PM |
| Kurt Ulrich | Jo Thieling | 09/17/2015 03:15 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 09/16/2015 05:50 PM
- Final Approval Date:
- 09/17/2015