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WS-1 <br />WORK SESSION STAFF REPORT <br />Work Session Item No. 1 <br />Date: September 6, 2022 <br />To: City Council <br />From: Michael Grochala, Community Development Director <br />Re: Tax Increment Financing Request — Ryan Companies, 35E & Main Street <br />Background <br />As discussed at the August 1, 2022 City Council work session Ryan Companies, US, Inc., <br />recently entered into a purchase agreement to acquire 33 acres north of Clearwater Creek, west <br />of I-35E. They are also coordinating plans for development of the 10 acres south of Distribution <br />Alternatives proposed by MSP Commercial. Ryan is proposing construction of 3 buildings <br />totaling approximately 451,000 square feet of manufacturing, office and warehouse space with <br />an estimated market value of $31,000,000. Development of the south parcel, by MSP would add <br />approximately 130,000 square feet and an additional $8.5 million in taxable market value. <br />Ryan Companies has submitted a request for Tax Increment Financing (TIF) to assist with what <br />they consider extraordinary costs associated with the site development. TIF is a tool that uses <br />the incremental increase in taxes generated by the development to defray the costs of eligible <br />expenditures. These include soil corrections, site fill, public utility relocations, transmission line <br />relocation and the street improvements. Ryan Companies application identified a financial gap <br />of $6.65 million. <br />Staff has worked with Baker Tilly to complete an analysis of the request and development pro <br />forma. Mikaela Huot of Baker Tilly will be present at the work session to provide an overview <br />of this analysis. <br />In summary, staff is proposing to establish two TIF districts to account for timing differences in <br />the development proposal. The "north" district includes the Ryan project and the "south" district <br />would include the development of the MSP parcel. <br />Based on the information provided estimated tax increment revenues have been calculated and <br />provided in the following table. <br />Projected Tax Increment Revenues <br />Ryan and MSP <br />Ryan (north) <br />MSP (south) <br />Total Building Square Footage <br />587,000 <br />451,000 <br />127,000 <br />Total Estimated Taxable Value <br />$40,460,000 <br />$31,570,000 <br />$8,890,00 <br />