Review Proposed Senior Project by Trident Development and Provide Feedback to Developer

The purpose of this case is to review a proposed 186 unit senior project proposed by Trident Development and to consider provision of Tax Increment Financing for Memory Care and Assisted Living Buildings in the COR.   

Project Description and Valuation
Trident Development is proposing to build a 2-story 78 unit Senior Assisted Living (AL) building, a 1-story 24 unit Memory Care (MC) building and a 4-story 84 unit Independent Living (IL) building adjacent to the VA Clinic on 6.05 acres in the COR.  The proposed project is being built on all of Outlot B (28-32-25-42-0023) and part of Outlot A (28-32-25-42-0022), Ramsey Town Center 12th Addition.   The property is owned by Deal Family Holdings LLC. The proposed project is different, and broader than the project proposed by Trident two years ago which included only 14 MC units and 60 AL units and did not include a non-TIF IL building along Sunwood Drive.  City Staff provided the Anoka County Assessor project information and the Assessor has provided an estimated assessed valuation and tax information for the proposed project that includes 2 buildings.  The County Assessor project a Low, Middle and High valuation estimates for each building based on varying costs based on the quality of materials used to construct the structure and on the level of facade finish illustrated below:

Parcel A – 84-unit independent living apartment building sitting on 83,168 sf of land
Low -    $17,220,000 or $205,000/unit
Mid -     $19,320,000 or $230,000/unit
High -   $21,420,000 or $255,000/unit
 
Parcel B – 78-unit assisted living apartment building with a 24-unit dementia care building sitting on 180,540 sf of land
Low -    $19,890,000 or $195,000/unit
Mid -     $22,440,000 or $220,000/unit
High -   $24,990,000 or $245,000/unit

For the purposes of this case, Staff is using the Middle estimated assessed valuations for the preliminary TIF and future property tax analysis. 

Taxes and TIF
The parcel is not in TIF 14 district.  Trident has requested the creation of a new 25-year Housing Tax Increment District and to retain 90% of the available increment.  The estimated annual property taxes for the completed projects are $306,617 for the AL/MC building and $263,986 for the IL building.  Currently, the land proposed for the MC/AL project is generating $23,211 in property taxes annually and the IL Land is generating $10,708 in annual property taxes.  The Developer is seeking tax increment financing for the MC/AL project only.  Under the $22.44M tax assessed valuation scenario for the MC/AL project, it would generate approximately 251K annually and 6.17M in TIF over the 25-year TIF Housing District. Under the 90% (developer) / 10% (City) scenario, this would equate to 225K (Trident) and 25K (City) annually. Staff has put together an attached summary document that provides an estimate of each building, taxes and estimated TIF  for discussion purposes.

Zoning
The proposed development property is currently zoned COR-1 (mixed use core sub-district) which is zoned appropriately for the proposed project.  Staff has communicated the design standard for the COR 1 district, which requires the highest level of materials and connectivity to the street.  The proposed memory care and assisted living use traditionally does not typically see a lot of mobility outside the building to adjacent businesses by its residents, although visitors will be coming and going to the site on a regular basis which could visit businesses in the COR. However, the 84-unit independent living project proposed along Sunwood Drive will include active seniors that will provide many customers for businesses in the COR.

Next Steps - Council Direction
In order for the developer to be comfortable moving forward with the project and working on a formal site plan submittal, they will need to know if the City Council is supportive of the following development terms: 

• Creation of 25 TIF Housing District and the provision of TIF (90%/10% Split)
  • TIF request is 5.54M with a present value of approximately $2.63M.

Roger Fink from Trident Development will be present to answer questions and to add greater detail about his company and proposed project in the COR.
  

The Developer is hoping to submit a site plan this year and to commence construction shortly after with the provision of TIF.  Trident has provided a Demand Assessment for Senior Housing in Ramsey Study which has identified the following demand for 130 Independent Living units, 62 Assisted Living units and 47 Memory Care units by 2030.  The raw TIF ask is for 5.54M in raw TIF (present value of 2.63M).  The Independent living project will not be in the TIF District.  This project will generate approximately 6.61M in gross property taxes over a 27-year period, with 2.64M going directly to the City General Fund. Based on the proforma provided by Trident, the provision of TIF increased the Cash on Cash return from 7.3% to 9.6% by year 5.  Cap on cost increases from 7.4% to 8.1%.(See attachments and explanation in TIF Request) If the project proceeds, the City will work with Ehlers to also underwrite the project to ensure the developer is not being unduly enriched by the provision of TIF to ensure the TIF assistance is not unduly enriching the developer.  It is anticipated that the project will bring over 40 new jobs to Ramsey with wages ranging from $40,000 to $80,000 a year.  The City Council should provide consensus/feedback to the developer on the level of support for the project including the level and duration of TIF and overall support for the project as a whole.

Economic Development Director Sullivan
Community Development Director Hanson

Communication to developer on the level of Council support for the proposed project and willingness to provide assistance, so the developer can make a decision to proceed. or not.

Communication to developer on the level of Council support for the proposed project and willingness to provide assistance, so the developer can make a decision to proceed. or not.