Purpose (A) Receive proposal from Flagship Fitness for a roughly 65,000 sf, two-story, high-amenity, family-based, fitness and aquatic center, to be located in The COR.  Flagship Fitness is proposed to be privately owned and operated (not a non-profit).  Preliminary estimated total project costs are nearly $20M.  Flagship Fitness is asking for the City to partner in the project, with a contribution of about $3M (free land and TIF).  Adrian Haid, CEO/President of Flagship Fitness, will be in attendance of this meeting; along with Jeff Minea of Lee & Associates.  Mr. Haid and Mr. Minea would like to introduce their project proposal to the City Council.

Purpose (B) Provide staff with preliminary direction on how to proceed with this prospect.  Please see alternatives section for details.

 

City Council is generally interested in moving forward with further investigating the Flagship Fitness proposal exclusively, right now.  In other words, move forward with negotiating this specific Flagship Fitness proposed project now, without investigating other avenues for community centers (see alternative below). 

If this was the direction of Council, staff would suggest the following process steps:
(A) select a site, or a couple potential sites. 
(B) negotiate the deal, purchase agreement, and business subsidy.  Also negotiate the scope of services the City will require/ for being a partner in the deal. 
(C) complete the entitlement process, site plan, platting, etc.

If the Council did select this alternative, staff would suggest requiring the prospect to provide a clear financing commitment from the project's primary equity partner (and a better description of that equity partner).  At this point, staff has only been able to get a verbal commitment.  Staff is being told the equity partner wants to see how serious the City is before providing something in writing (the equity partner is PDI and/ or Associated Bank).  Also, depending on site location, staff believes this project will likely trigger several "other" development costs (and challenges) not outlined in the scope of the attached project budget.  Those items should be further vetted moving forward.

Overall, staff thinks the basic deal points on this project are reasonable/ realistic: City contribution request seems realistic ($3M or 15%), the City will not need to own/ operate, the project will pay property taxes (about $250K per year total), the project will be high-quality, project will provide several high-amenity health & wellness services, the project meets the City's vision for a destination user in The COR, the project budget seems reasonable (about $20M), the project will create jobs (about 90), the project will get Ramsey an indoor aquatic center (anecdotally appears to be highly desired by residents), and the developer appears to be experienced.  Staff does not anticipate the City will be able to obtain a drastically different basic deal structure with other developers/ providers (for a privately owned and operated project).

Lastly, staff would like to note, Flagship Fitness has indicated a willingness to work with the City on using this project to spur the construction of a parking ramp.  For example, rather than the City contribute free land and TIF (as depicted in this proposal), the City could construct a parking ramp and provide Flagship with parking ramp stalls as the City contribution to the project.  For Flagship Fitness, this option would drastically reduce the amount of land they would need for their project (i.e. remove surface parking).  Additionally, this would eliminate construction costs, for Flagship, to construct a surface parking lot.  For the City, this could help us justify/ spur the construction of our next parking ramp (which would benefit other projects, help push the vision for our urban downtown, and maximize the development potential of The COR).  Lastly, staff would note--having a project "in-hand" would help staff apply for grants to help fund the construction of a parking ramp (typically, grant sources don't like funding parking ramps on speculation of development).


Alternative 2:  Take step back, discuss policy, investigate other cities, other opportunities, and RFP
At this point, it appears Ramsey is interested in a privately owned and operated community center.  The City appears to be generally comfortable to making an upfront 1-time contribution to a community center project (i.e. the CIP shows $4M).  The City does not have a scope/ policy defined for desired/ required services a Ramsey community center would provide. 

There are many alternatives/ approaches available to the City when considering a community center (regarding the partnership structure, ownership, operations, service offerings, etc.).  There are many examples across the Twin Cities.  This specific Flagship Fitness proposal appears to be similar to the Champlin Park/ Lifetime Fitness model (it's staff's understanding Champlin provided free land and parking).

If the Council wanted to consider this alternative, staff would suggest the following process.
(A) tell Flagship Fitness we are interested in working with them, and we are interested in their project; however, we need time to discuss the "big-picture" before we are willing to consider this specific Flagship Fitness proposal.
(B) staff investigate what other cities have done, create a report/ MEMO/ comparison chart. 
(C) staff develop a list of potential service providers/ models--i.e. Flagship Fitness, YMCA, Lifetime Fitness, City-owned, etc. 
(D) staff complete a community engagement exercise: survey, open house, etc. to better understand community expectations.  (E) staff work with Council to develop a RFP to send to all potential providers/ developers (including Flagship Fitness).  The RFP could outline the City's preferred site locations in The COR, preferred site design aspects, required minimum services, city's willingness to participate, etc.

The benefit of this approach is better understanding what other cities have done, and what options exist.  Also, the City would provide other Community Center providers an opportunity to respond to a City RFP.  The drawback to this process is it will take time (highly variable depending on scope of investigation, 3-18 months), and will require use of city resources (again, highly variable depending on scope of investigation, $5,000-$25,000).  Additionally, Flagship is here today, they appear to be real prospect, and this project appears to be reasonable/attractive on the surface.


 Alternative 3:  Hybrid alternative/something in the middle
Staff is open to combining these to alternatives as the Council sees fit.

Staff note: regardless of the alternative selected, staff would plan to directly involve the Planning Commission, EDA, and Parks Board with this discussion, from the beginning.