Consider Recommendation to Approve TIF Plan, TIF Agreement and Business Subsidies; Case of Zero Zone; Case of Zero Zone Refrigeration, LLC

The purpose of this case is to consider a recommendation that the City Council approve the TIF Plan, TIF Agreement and Business Subsidies for Zero Zone Refrigeration (Zero Zone) relating to their proposed 55,000-58,000 square foot expansion here in Ramsey. Althought not required by State Statute, Staff thought it would be important to have the EDA review the TIF plan and TIF Agreement and make a recommendation to the City Council.   As previously communicated, 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 and the City Council has previously provided support for this level of TIF assistance. Zero Zone and the City have also applied to the State of Minnesota for $350,000 from the Minnesota Investment Fund (MIF) and $450,000 from the Job Creation Fund (JCF).  The State has provided conditional approvals for the above assistant amounts and there will be additional documents needed to be executed by the City and/or Zero Zone Refrigeration. Zero Zone has indicated that if the assistance above is approved, they will move forward with the project in Ramsey; not Iowa.

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 55,000-58,000 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.  Two Public Hearings notices have been published for the October 14 City Council meeting to consider approval of the TIF plan, TIF Agreement, MIF Agreement and Business Subsidy Agreements.

Staff has been working with DEED, TAAFT Law and Ehlers to draft documents required for the TIF, MIF and JCF.  All documents are complete and will be formally acted upon by the City Council on October 14th, following the Public Hearings.  Below is an updated schedule for reference:

 

August 14, 2025	EDA meets at 7:30 a.m. to consider TIF request and makes recommendation to City Council (COMPLETE)
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 (COMPLETE)
August 27, 2025	Project information, property identification numbers, fiscal impacts and maps sent to Ehlers for drafting documentation. (COMPLETE   Ehlers confirms whether building permits have been issued on the property to be included in the TIF District. (COMPLETE)
By September 5, 2025	Ehlers conducts internal review of Plans. (COMPLETE)
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. (COMPLETE)   *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.] (COMPLETE)
October 9, 2025	EDA meets at 7:30 AM to consider recommending the Plans and TIF Agreement in connection with the TIF District. (THIS MEETING)
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. City conducts Public Hearing for MIF
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 has reviewed the TIF Agreement drafted by TAFT Law and the TIF Plan Drafted by Ehlers and they include the 360K of Pay-go TIF Assistance, the requirement to create 55 new jobs onsite with wages of at least $21.00/hr., a requirement to operate onsite for 5 years and to construct at least a 55,000 Square Foot Manufacturing Expansion. Public Notices have been sent to ECM for publishing as required by State Statute.   

The 350K MIF Award is a partially forgivable loan.  The City will enter into a 50K loan agreement with Zero Zone Refrigeration with the payments seeding the City Revolving Loan Program.  300K of the loan will be forgiven as long as project is completed and job creation goals are met.

The 450K JCF Award is broke down as follows (225K Cap Ex Refund, 225K Payment for Job Creation)

Alternatives Include:
1) Motion to recommend to the City Council approval of TIF Agreement, TIF Plan and TIF Business Subsidy for Zero Zone Refrigeration; subject to City Bond Attorney Review (as presented)
2) Motion to recommend to the City Council approval of TIF Agreement, TIF Plan and TIF Business Subsidy for Zero Zone Refrigeration; subject to City Bond Attorney Review (with changes)
3) Something Else

And;

1) Motion to recommend to the City Council to accept the MIF (350K) and JCF (450K) awards and to enter into required contracts to accept these funds and to authorize 50K MIF loan; subject to City Bond Attorney Review (as presented)
2) Motion to recommend to the City Council to accept the MIF (350K) and JCF (450K) awards and to enter into required contracts to accept these funds and to authorize 50K MIF loan; subject to City Bond Attorney Review (with changes)
3) Something Else

The $5000 Application Fee received will be used to pay for a portion of financial analysis and drafting of TIF Documents; the rest of the administrative fees will be paid from the newly created TIF District No. 19.  The TIF 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.

Staff recommends the following motions:

1) Motion to recommend to the City Council approval of TIF Agreement, TIF Plan and TIF Business Subsidy for Zero Zone Refrigeration, LLC; subject to City Bond Attorney Review (as presented)

And;

2) Motion to recommend to the City Council to accept the MIF (350K) and JCF (450K) awards and to enter into required contracts to accept these funds and to authorize 50K MIF loan with Zero Zone Refrigeration, LLC; subject to City Bond Attorney Review (as presented)
 

1) Motion to recommend to the City Council approval of TIF Agreement, TIF Plan and TIF Business Subsidy for Zero Zone Refrigeration, LLC; subject to City Bond Attorney Review (as presented)

And;

2) Motion to recommend to the City Council to accept the MIF (350K) and JCF (450K) awards and to enter into required contracts to accept these funds and to authorize 50K MIF loan with Zero Zone Refrigeration, LLC; subject to City Bond Attorney Review (as presented)