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Home My WebLink About2008.07.21 EDA Packet AGENDA CITY OF HUGO ECONOMIC DEVELOPMENT AUTHORITY MONDAY, JULY 21, 2008 - 8:30 AM 8:30 am 1. Call to Order 8:31 am 2. Roll Call 8:32 am 3. Approval of Minutes EDA Meeting of June 16, 2007 8:35 am 4. Carpenters Restaurant Site Plan Update • Mike Anderson 9:15 am 5. Discussion Hugo Commons TIF Application Review • Paul Steinman, Springsted 10:00 am 6. Update on Downtown Redevelopment 10:10 am 7. Update on BR&E Subcommittee 10:15 am 8. Discussion on Marketing and Promotion of the City 10:30 am 9. Adjournment r BACKGROUND MEMO FOR THE EDA MEETING OF MONDAY, JULY 219 2008 3. Approval of Minutes for EDA meeting of June 16, 2008 City staff recommends that the EDA approve the minutes for the June 16, 2008 EDA meeting as presented. 4. Carpenters Restaurant Site Plan Update Staff will present to the EDA the concept plan for Carpenters on the Lake. Mike Anderson from Carpenters Restaurant will also be present at the meeting. The plan shows a two story 16,000 square foot building with a banquet room and attached retail spaces. Mike Anderson would like to start the site plan and TIF application approval process. Staff recommends that the EDA provide informal feedback on the plan. 5. Discussion Hugo Commons TIF Application Review Paul Steinman from Springsted will provide the EDA with the outcome of the TIF application analysis for the former End Zone property. Bill Lentsch and Dale Dockendorf who have the purchase agreement on the property will be present at the meeting. Staff recommends that the EDA direct staff on whether or not to draft a TIF Agreement with the applicant and bring it back to the EDA at their August meeting. The TIF agreement will also go to the City Council in August if staff is directed to draft an agreement. 6. Update on Downtown Redevelopment Staff will update the EDA on the progress of the downtown redevelopment projects. 7. Update on BR&E Subcommittee Staff will update the EDA on the progress of the BR&E Subcommittee. 8. Discussion on Marketing and Promotion of the City The City has repeatedly received praise for its efforts in managing the recovery process following the disaster. The city staff believes the extraordinary media coverage the City has received during the past few weeks has cast a positive spotlight on the attitude and professionalism found within the City of Hugo. Staff would like to discuss with the EDA ways to promote the City during this unique time as a good place to locate a business. MINUTES FOR THE EDA MEETING OF JUNE 16, 2008 EDA Vice President Phil Klein called the meeting to order at 8:35 am. PRESENT: Jan Arcand, Mike Granger, Phil Klein, and Brian Thistle ABSENT: Fran Miron, Jim Bever and Tom Denaway CITY STAFF PRESENT: City Administrator Mike Ericson, Community Development Director Bryan Bear, and Associate Planner Rachel Simone APPROVAL OF MINUTES FOR THE EDA MEETING OF MAY 19, 2008 Thistle made motion, Granger seconded, to approve the minutes for the EDA meeting of May 19, 2008. All aye. Motion carried. Discussion SACIWAC Fees Jamie Wallerstedt from WSB & Associates presented to the EDA the research for the options for the City's SAC/WAC fees. The EDA asked staff to research the SAC/WAC connection fees for the City. Jamie Wallerstedt provided the EDA with alternative calculations/distribution of costs. She gave real world examples of three options in both residential and commercial. She provided the EDA with a spreadsheet of the examples. Granger and Arcand agreed that the user or developer should pay per water usage. The residential users should not have to pay for water that is not being used by them. Granger made a motion, seconded by Arcand to recommend to the City Council that option #1 be used without increasing the residential charges and collecting part of the fee at the time of plat. All aye. Motion carried. Discussion on TIF Certification and Hugo Commons TIF Application Paul Steinman from Springsted gave a presentation on TIF Certification and will provide options for the EDA to consider. There was also discussion on the TIF Application for Hugo Commons (former End Zone site). Paul Steinman stated that the June 30, 2008 deadline to certify the district could be ignored since there has not been any action in the district. He stated that March 2009 is the mandatory deadline since that is three years from the date the first house was demolished. The City will need to certify by then to collect the increment from the properties. He recommended to the EDA to wait after June 30, 2008 to certify the district. Thistle made a motion, seconded by Arcand to wait until after June 30, 2008 to certify the TIF district. All aye. Motion carried. Bill Lentsch gave an update on his project at the former End Zone site. He discussed the MNDOT letter. Bryan Bear stated that staff will set up a meeting with the developer and MNDOT. The applicant stated that he is having a hard time finding tenants; he needs at least 50% leased to receive financing from the bank. Update on Downtown Redevelopment Staff updated the EDA on the progress of the downtown redevelopment projects. Carpenters Restaurant owners continue to work on a redevelopment plan for the site. There has been no contact with the owners of Ricci's restaurant to date. The CDD updated the EDA on the 147th Street and Highway 61 intersection improvements. Discussion on Marketing and Promotion of the City Following the May 25 Tornado The City has repeatedly received praise for its efforts in managing the recovery process following the disaster. The city staff believes the extraordinary media coverage the City has received during the past few weeks has cast a positive spotlight on the attitude and professionalism found within the City of Hugo. Staff discussed with the EDA ways to promote the City during this unique time as a good place to locate a business. Tom Weidt from the Planning Commission talked to the EDA about a marketing plan for the City. Tom stated that he is working with the local, Minneapolis, and St Paul papers to donate full page ads for a"Thank You" to all that helped during the disaster. Tom talked about getting developers involved in the promotion of the City. Granger stated that the City needs new population signs to show that we have aver 12,000 people now. There was a consensus within the EDA that marketing should be done for the City. ADJOURNMENT Granger made a motion, seconded by Klein, to adjourn at 10:00 am. U W a V ir J Front Elevation CARPENTERS ON THE LAKE Hugo, Minnesota m PROPERTIES TO BE ACQUIRED BY THE CITY OF HUGO L A M P E R T A R C H I T E C T S 13837 HE Uneoln Sfnwf� Ham l.ak..MN 55304 M /Mnw1n.133.1 Jlt rewlsJ.7s7.JNs t �__- PROPERTIES t t OWNED BY THE CITY OF HUGO t (HATCHED �( _ t AREAS) � OR 1 ` \\ O F GA\CIN �`� PROPERTIES '(RV r- r' c''Z.o OWNED BY co' CARPENTERS PROPERTIES _ L r- ' T ' '� _ � ` _...._. ._ OWNED BY THE E --j EvELoPMENrPEFBMETER _ CITY OF HUGO (HATCHED a AREAS) 7aSnN0 PROPERTY UNE ..... I H x x �` (TYPICAL) W _ CIIV PAft 4.0 LEIS' 0 0 TT TT ' CITY PAN - FA %00 M/OA111E 4 Q o - I , , , I _ AREA 2 4111,91111 PROPERTY tt t U 1 ; I j ~f�-iti111 f1�' OWNED BY THE O CURRENT o '' -�i� i�� ' ' 1 j � i ir �+�i .. -1777 .: RESIDENT W = t SM♦ y I _ , .. Izaoo S.F. I ' o - ' RETAIL/CCM I W I t ` - Proj.at Dnipnr.BEN R. Drown BJs BEN Chocked"MRLAML Ravleims 7 1 03.06.08 PREUMWARY x E.,.�...- 03.07.06 REVISED 00.17.06 REVISED N „ Y 1 _ t MASTER SITE PLAN A SCALE t . 20-o \- MASTER 5 1 SITE PIAN Sheet Number t MA1 — - Project No. 070831_2 FU TURE \ \ DEVELOPEMENT \ \ \\ ti FUTURE \ \ PROPERTY OR RICHT$TO BE ACQUIRED CARPENTERS PROPERTY PROPERTY OR RIGHTS TO BE ACQUIRED DEVELCPMENT I \ \\\\ FUTURE DEVELOPMENT BOUNDARY 1 \ \ LA M P E R T \ \ � \ A R C H I T E C T S 131137 HE\ \ \ \ f d H 55304 711aLk.. F-?" k.UMN I ' f o [ TYPICAL E70$T,NG """ -- - _- .""- `�` Q •' PROPERTY LIRE ow, .401 G�� 1 j 1 1_1 1 1 ,es a l` THE y ----- --"i--""_----- 1 1 _ / " LLI I ' r FUTURE DEVELOPMENT _-j- \-UMIT OF PARKING FOR CARPENTERS 1` 11 11 j j 1 1 !r I 0• W J --'_ - — - ' 1 C C aA�d- s E o a0 e.-� I�-o' y FUTURE DEVELOPMENT !f 1 1 1 ` ► I I f pQ W {�T (1 . 11 t11 tlt Ilt 111 11 191 I� L CL a.+ ' h C n' O' "' 11 tl 11' 111 11 �•� I ! I I 1 1 I �- \ n '��'D 1 R e 110 i� I It 1 1 1 1 1 I ce lZirill, ■ Q ,� ■ WT OF PARKtlM FOR CARPENTERS r ■ y I 1 1 I 1 f 1 ' O 21 -O• b 9 •' '. I I 1 1 1 1 1 I accccccca �" . ._ ProjAet Dnlgnr.BEN R. AND CUTE '.'" Mj .aa GUTTER ..x .or.e 9�uRL/tuL Q (Arn _ 0 1 R SITE DATA � _ o 02.19.08� oz.ts. PREUw MAR • r 07.17.08 PREUMWARY ZONED C-1 CENTRAL BUSINESS o2- 16 PARKING DATA BUILDING OCCUPANCY ZONING REQUIRES 3,400 Sf DINING&LOUNGE I@ 1/35 SF=100 STALLS o 2,000 sf BANQUET ROOM @ 1 /35 SF=57 STALLS 5 1,560 sf COMMERCIAL @ 1 /200 SF=8 STALLS 1,900 sf COMMERCIAL @ 1 /200 SF=10 STALLS �'" SITE PLAN d o y TOTAL REQUIRED =175 STALLS D �� "s o Sheet Number STALLS PROVIDED =140 STALLS t SITE PLAN �r/Ilk Li q1 SCAM t .2 -0 �\- g Al PrOjOld Nw 070831 Z L A W P E R T A R C H I T E C T S 13a37 NE U—In St...t 3 Nam L.k., NN 55304 101 —7.3.7a.12lt r.mu.�n.zsu 125'-0' 25'-0' 10'-0' 28'-4' 88'-8' 29'-0' OR N01 uC�\ON J cox4sl ..:.....>... :........> < . > . . < : oININO 2100 SF-200 SEATO : OUTDOOR DECK o .•m F:n .r t�..n :a•.w., fx.yw. mt +•v,;•:: ,w;w+.. Fn,..m :m i:: 870 SF R .:.:i...:, i...::..i:..:i..... .. MECWELEC ... ... ... 'o ROOM .:..,...i ...:.;..i .:.•.v..i .. ,. �}... 245 SF o ,:.,.:w. ;::::::: .::.=+:.,: ::.,.•�.wv .w.w. •wi� ..v w,,v~ ..w.vti ::. ,w: .v.,,;.,w .,..: ..: . fV N I KRCHEN r r ,R 750 SF :......, W :::.:::, DUMB .:..,... ,..::...... .. .. .. LL .... :. .. .. .. ......t . ...... .. .v .,.• :... AJ TIE { Q ...i:...: •......: . ® .. •..o: ..:...:.......: •..o: :...':..;....::...' ..moi :...':... o v 0 SERVICE CORRIDOR .... ... ~,• 1 I .^ ...... .. ............... .. ........... ... . ........ .. .............. ... ......... .............. ... .............. ... .............. .. . ............... .. H.............. ... .............. ........... TOTALAREA •••••• Z C !AlNTOR o ROOM __ W o COMMERCU CL RESTROOMSL TENANT _- ... ... v., W 0 -- , _ T; I I .,Ht O ........ .. .. ...........p. .. ...... .. .............. .. .............. ... _ .......... . .. .... ......... ...... m: n n COMMERCIAL TENANT COMMERCIAL TFJUHT I 760 SF 900 SF i oUP •^�+m U7 ....... ......_..... .... .. ...... G.�r�eM 200e ENTRY ENTRY O I Project O..i�.r.BEN R. CANOPY CANOPY 0—By: MRL o ABOVE ABOVE L- -,4 - --------1 O..ek.J Sly:YRl/LYl 9'_4' ENTRY CANOPY A80VE a 12'-6' 9'-O': 25'-0' 4-2 9'-0' 12'-6' tY-I' ItB'-10' _ 68'-0' 35'-11' 21'-t' 25'-0' 18'-9' 1 B'-9' 18'-9' 18'-9' 18'-9' IW-9' 18'-9' 150•-0' i 3 s 1ST FLOOR PLAN 16 000 SF OPTION) fi SCALE: 1/15- - 1-0 0`_ z i Sheet Number u $ Project Na 1770SM-2 L A M P E R T A R C H I T E C T S 13837 NE U-1. St—t 8 Ham L.k., NN 55304 101 nwvx.a.»a.ixn r.vxsanx.xaw N�nM.NwNM-ad�.sw. 125•-0 22,-0' 70'-0' �M�NPR N01 F�.J%pN CONS" COMMERCIAL TENANT SPACE t7 800 SF BANQUET ROOM I m2.000 133OCC sF O W n cn Y DUMB WAITER Q OPTIONAL DOOR TO ROOF DECK OVER O _ LOUNGE AREA W J to ......... . ... .............. ... .............. 2nd FLOOR ..a... .. J C TOTAL AREA z C 6,200 SF W COMMERCIAL TENANT SPACE W T 1.300 SF y O ROOF BELOW ON ROOF BELOW OPEN TO BELOW I Q H ELEVATOR STAIR LOBBY \ Z Cyrrla.r xaa • - l..n.r.L—w rl . Pmj.ct Dpigno:BEN R 18'-0. 10'-4' 12'-2' 21'-6' 25'-0' Dr—By: MRL Cn.ck.d BX MRLAML v R..Mi-. 2ND FLOORPLAN (16,000 SF OPTION) Z (- N SCALE: 1/76 1-0 Y b i 5 8 Y Sheet Number U OiiF C3 LL Project No. 070831-2 L A M PE R T A R C H I T E C T S Ism?NE Uncan street 3 Ham Lake, MN 55304 101 Tena)i1)SSlfll rae)f11f).SNf IawrMM.�M-.,.I�•..n, Q�Np, -Q lxvA Co Aso W cn Y CC Q W J ev F- 0 N Z C W c W = IZ o PREFlN METAL ROOF EDGE TOP F PARAP T CEMENT BOARD L 1 - CORNICE V i0P OF DECK L 0 PREFAB OENTILS O PREFlN ALUM WINDOWS PREFlN METAL ROOF PREFlN ALUMLi LA EDGE �"^1j1M 100e CEMENT BOARD Project D..*w..BEN R. 210 FINISHED FLOOR - CORNICE D—By MRL L 1 ♦- O CEMENT STUCCO aecMee By:MRL/LML pp pp R-lebne LARH H tl tl fl g LIGHT�FIXTURES-STYLE _{ El El s a a a CAST STONE VENEER FINISHED FLOOR BASE P1 - � a DOYNTT70FF 3'-0'PREFAB ARCHED CEMENT BOARD PREFlN ALUM WINDOWS UNDER CANOPY METAL CANOPY CORNISE o PREFlN ALUMINUM CEMENT BOARD TRY SYSTEM COLUMN WITH STONE BASE 5 5 i FRONT ELEVATION (16,000 SF OPTION)SCALE: 1 16 - 1-0 Sheet Number U E 0 Project No. 070831-2 Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul,MN 55101-2887 Springsted Tel: 651-223-3000 Fax: 651-223-3002 www.sphngsted.com MEMORANDUM TO: Bryan Bear, Community Development Director Rachel Simone, Planner FROM: Paul Steinman, Vice President/Client Representative DATE: July 18, 2008 SUBJECT: TIF Assistance Review of the Frenchman Centre Redevelopment Project The purpose of this memo is to provide guidance to the City of Hugo on the public assistance requested for the Frenchman Centre Redevelopment Project. Springsted conducted this analysis based on the information provided by the Developer. The project includes the acquisition, demolition, site preparation and construction of a 23,000 square foot commercial/retail building. The Developer estimates the total development cost of the project to be$4,353,490. The Developer has requested TIF assistance in the amount of$543,100 (present value) in the form of a pay-as-you-go reimbursement, which is an annual payment of tax increment from the City to the Developer. The property will pay an annual base property tax, to all taxing jurisdictions, of$9,906 through the term of the district. We estimate the annual tax increment reimbursement to commence in year 2(2010),with a payment of$32,251,and the first full year of reimbursement in year 3(2011)of$50,461 based on a total Estimated Market Value of$4,159,450. The future value of the annual TIF reimbursement is$1,294,022 based on the full term of the District. Our calculation of a Pay-as-you-go Note shows that using a 6.65% interest rate applied to this future value amount, gives us a present value of approximately$543,100. Here is how the Pay-as-you-go Note breaks down over the 26 years of TIF requested: $ 543,100 Principal 750,922 Interest $1,294,022 Total Principal and Interest But-For Analysis The"but-for'test is used to determine whether or not a project would proceed as proposed without the use of the TIF assistance. To complete this analysis we need to examine a 10-year pro forma of the project comparing the rate of return with assistance and without assistance. Springsted used the assumptions included within the Developers' application summarized below. Total project costs are$4,353,490. The Developer is proposing a 20/80% split between equity and private financing, equating to an equity amount of $853,490 and a financed principal amount of $3,500,000. The Developer has indicated the private financing will be a 20-year mortgage with an interest rate of 7.00%. The TIF assistance is provided on a pay-as-you-go basis and is not available during construction. For our side-by-side analysis of the project with and without TIF,we used identical financing assumptions. Public Sector Advisors City of Hugo, Minnesota-Frenchman Centre Redevelopment July 18, 2008 Page 2 The Developer pro forma assumes a net rental rate of $16.80 per square foot, with the tenant responsible for all additional expenses, such as common area maintenance, insurance, and property taxes. The Developer has included a 10% vacancy factor in their pro forma. We assumed a 2% inflation factor for both revenues and expenses. It should be noted that higher than projected least rates, or lower than expected vacancy rates, will result in the Developer realizing a rate of return greater than what is indicated in our analysis. Springsted included a hypothetical sale of the asset based on the following assumptions: o A Fair Market Value of $4,631,206 determined using an 8.5% capitalization rate. (Based upon today's market,this is an acceptable rate for a potential purchaser of investment real estate) o Deduct 3%for the cost of the sale o Deduct$2,169,748 which is the remaining principal balance on the permanent loan o Results in net sale proceeds of$2,322,522 Three calculations used to determine a project's rate of return in order to address the but-for question include: (1) Cash on Cash Return (annual test) o measures the return on cash invested in an income producing property o calculated by dividing annual net cash flow(NO1 minus debt service plus reserve deposits plus TIF reimbursement)by the amount of equity invested and is expressed as a percentage (2) Internal Rate of Return(IRR) (tested for the term of the pro-forma) o measures the average annual yield on an investment o analyzes a series of cash flows based on the original equity to determine what the interest rate received for an investment consisting of payments (negative values) and income (positive values) that occur at regular(annual)periods (3) Return on Investment(ROI) (tested for the term of the pro-forma) o measures the amount of profit a property generates after a certain period of time Developers are typically interested in the cash on cash rate of return and return on investment to determine the profitability of income producing properties. The cash on cash method considers the net cash flow as a measure of the equity invested to determine the Developer's cash return. An investor is typically interested in the internal rate of return of the project to determine the return on their initial investment, generally over a longer period. In this case, the Developer and investor is the same party. The internal rate of return measurement is typically what is used by public agencies to determine the need for a subsidy. Our methodology is to estimate all three calculations to help measure the project's financial performance with and without the assistance in order to address the but-for question. Should a return lie below a reasonable range without a subsidy, we can assume the project will not move forward without such subsidy. Should a return lie within a reasonable range with a subsidy,we can assume the amount of subsidy tested is appropriate for the project.All such estimates should be viewed as general indicators of performance and not exact forecasts. The number of current and future variables affecting these estimates is great, and any variation in such estimates can have significant impact on the calculated returns. Specifically, a change in the Developer's permanent financing vehicle that reduces annual debt expenditures,all things being equal,would increase their returns. Cash on Cash Without assistance the project is expected to generate low cash on cash returns, after the first year ranging from 0.44% to 7.97% in year 11. With the assistance the project is expected to generate returns ranging from 4.25% to 13.88% in year 11. A projected sale of the asset is not considered in the calculation of cash on cash return. City of Hugo, Minnesota-Frenchman Centre Redevelopment July 18, 2008 Page 3 Internal Rate of Return Without assistance this project is expected to generate an internal rate of return of 9.13% in 2019. The calculation of the internal rate of return includes a hypothetical sale of the building at the end of year 11 (2019)as described above. Using the same assumptions, with the TIF assistance we calculated the project would generate an internal rate of return of 14.71%. Return on Investment The calculation of the return on investment includes an average of the total cash flows from distribution over 10 years, divided by the initial equity investment of$853,490. With the assistance the calculated return is 15.51% and without the TIF assistance the estimated return on investment is 4.11%. Summary Table of Rate of Return Calculations: With TIF Assistance Without TIF Assistance 1 Cash on Cash Return(10-year) 4.25%- 13.88% 0.44%-7.97% 2 Internal Rate of Return 2019 14.71% 9.13% 3 Return on Investment 2011 15.51% 4.11% Conclusion The calculated cash on cash rates of return, internal rates of return and returns on investment show the subsidy has a positive impact on the project, providing assistance necessary to enable the project to proceed. An examination of the spread of return percentages with and without the assistance is another discussion point that arises as a result of our analysis. In this case the spread is fairly significant indicating that the assistance makes a large impact on the project, supporting the fact that the assistance may be necessary to get the proposed deal to take place at this time in the current market environment. Without the assistance, the timeline and type of project may be adversely impacted. Our analysis shows that$316,772 (present value) of tax increment assistance, over ten years, results in an internal rate of return of 14.71%,which lies generally within an acceptable range for these types of multi-tenant projects. Please contact me at(651) 223-3066 or psteinman springsted.com with any questions or comments. f f�`yam• ---..�. -' - — � – e - WIN I APO/ ✓ \ Elio City of Hugo, Minnesota APPLICATION FOR TAX INCREMENT A. APPLICANT INFORMATION Name of Corporation/Partnership Development Partners Hugo LLC Address 2734 County Rd.D East,White Bear Lake,MN 55110 Primary Contact William M.Lentsch Address 2734 County Rd.D East,White Bear Lake,MN 55110 Phone 651-748-8888 Fax 651-379-5089 Email blentschAcitiesrealestate.com On a separate sheet,please provide the following: • Brief description of the corporation/partnership's business,including history,principal product or service,etc. Attach as Exhibit A. • Brief description of the proposed project. Attach as Exhibit B. • List names of officers and shareholders/partners with more than five percent(5%)interest in the corporation/partnership. Attach as Exhibit C. • A but-for analysis. Attach as Exhibit D. Attorney Name Address Phone Fax Email Accountant Name Address Phone Fax Email Contractor Name D.K.Dockendorf Address 2728 County Road D East Phone 651-248-3227 Fax 651-770-1204 Email dale@dkdockendorfinc.com Engineer Name Address Phone Fax Email Architect Name Caulfield Architectural Design Address 9388 Erin Court,Woodbury,MN 55129 Phone 651-769-6865 Fax 651-459-1358 Email brucecaulfield@msn.com B. PROJECT INFORMATION The project will be: ❑ Industrial Greenfield: X New Construction ❑ Expansion X Commercial Redevelopment: ❑ New Construction ❑ Rehabilitation ❑ Industrial Redevelopment: ❑ New Construction ❑ Rehabilitation ❑ Housing Redevelopment: ❑ New Construction ❑ Rehabilitation ❑ Mixed Use Redevelopment: ❑ New Construction ❑ Rehabilitation ❑ Other _ Please explain the basic components of the project proposed,i.e.,amount of new commercial square footage,numbers of housing units(rental or owner occupied),etc. The proposed retail building will consist of approximately 23,000 S/F of space with a variety of suite sizes to fit the future tenants needs. - 1 - City of Hugo, Minnesota The project will be: ❑ Owner Occupied X Leased Space If leased space,please attach a list of names and addresses of future lessees and indicate the status of commitments or lease agreements. Attach as Exhibit E. N/A at this time Project Address 13891 Forest Boulevard North,Hugo,MN 55038 Legal Description See attached Exhibit F Site Plan Attached: X Yes ❑ No Amount of Tax Increment Requested for: 1. Building Demolition $ 61,490.00 2. Environmental Remediation $ 0.00 3. Public Improvements $ 190,000.00(utilities,curb,gutter&right turn lane) 4. Site Improvements $ 291,610.00 5. Land Acquisition $ 0.00 (Land Acquisition shall not exceed 50%of total subsidy request) Total Subsidy Requested $_543,100.00 over 25 years @ 6%=$59,143/year Current Assessed Value on Project Site: $ 541,600.00 Current Real Estate Taxes on Project Site: $ 12,340.00 City $ 4,305.80 County $ 3,198.90 School District $ 510.38 Estimated Assessed Value upon Completion: $ 4,500,000.00 Phase 1 $ Phase II $ Estimated Real Estate Taxes upon Completion: Phase 1 $ 73,250.00 Phase II $ N/A Construction Start Date: 8-1-08 Construction Completion Date: 2-1-09 If Phased Project: N/A Year %Construction Completed N/A Year %Construction Completed C. PUBLIC PURPOSE It is the policy of the City of Hugo that the use of Tax Increment Financing should result in a benefit to the public. Please indicate how this project will serve a public purpose. X Job Creation: Number of existing jobs 0 Number of jobs created by project 96 X Increase in Tax Base - 2 - City of Hugo, Minnesota X Enhancement or diversification of the city's economic base. ❑ New industrial development which will result in additional private investment in the area. X The project contributes to the fulfillment of the City's development or redevelopment objectives. X Removal of blight or the rehabilitation of a high profile or priority downtown site. ❑ Other: D. SOURCES&USES SOURCES NAME AMOUNT Bank Loan Unknown $ 3,500,000—80%of cost Other Private Funds $ Equity $ 853,490 Fed Grant/Loan $ State Grant/Loan $ Other Loans $ ID Bonds $ Tax Increment $ 543,100*** TOTAL $ **Note: Tax Increment is not an upfront funding source as it will be provided only on a pay-as-you- go basis. Developer needs to identify funding sources to cover ALL costs up front,absent Tax Increment. ***This will be used either to improve ROI to the Investors or to reduce up-front equity USES See Attached Exhibit G AMOUNT Land Acquisition $ Site Development $ Construction $ Machinery&Equipment $ Architectural&Engineering Fees $ Legal Fees $ Interest During Construction $ Debt Service Reserve $ Contingencies $ TOTAL $ E. ADDITIONAL DOCUMENTATION Applicants will also be required to provide the following documentation. ❑ A) Written business plan,including a description of the business,ownership/management,date established,products and services,and future plans ❑ B) Financial Statements for Past Two Years Profit&Loss Statement Balance Sheet N/A—new entity ❑ C) Current Financial Statements Profit&Loss Statement to Date - 3 - QU of Hugo, Minnesota Balance Sheet to Date N/A—new entity ❑ D) Two Year Financial Projections To Come ❑ F) Personal Financial Statements of all Major Shareholders Profit&Loss Current Tax Return To Come ❑ G) Letter of Commitment from Applicant Pledging to Complete During the Proposed Project Duration To Come ❑ H) Letter of Commitment from the Other Sources of Financing,Stating Terms and Conditions of their Participation in Project To Come X I) Non refundable application fee of$2,500 X J) Check for$10,000 to be placed in escrow to be used by the City to complete analysis of the subsidy requested,and to pay costs associated with Attorney's fees for the TIF Agreement (unused portion to be refunded) The undersigned certifies that all information provided in this application is true and correct to the best of the undersigned's knowledge. The undersigned authorizes the City of Hugo to check credit references and verify financial and other information. The undersigned also agrees to provide any additional information as may be requested by the City after the filing of this application. Applicant Name Development Partners Hugo LLC Date May 22,2008 By f Its Managing Member -4 - City ofHugo, Minnesota TAX INCREMENT FINANCING PROPOSAL REVIEW WORKSHEET Redevelopment Districts 1. The project meets the criteria set forth in Section III of the City's Tax Increment Financing policy. X a) Meets minimum thresholds for size,value,and tax capacity. X b) Meets at least one of the objectives in Section III and satisfies the provision set forth in Section IV. X C) Demonstrates need for TIF with the but-for analysis. X e) Consistent with all city plans and ordinances. X fj Serves at least two public purpose as defined in Section IV. It serves 5 objectives—some of the jobs will have livable wage and benefits. All jobs are expected to pay higher than minimum wage. 2. Ratio of Private to Public Investment in Project: Points: $3,810,390 Private investment 5:1 5 $ 543,100 Public investment 4:1 4 7.02:1 Ratio Private to Public Financing 3:1 3 2:1 2 Less than 2:1 1 3. Structure of Financing: Points: X < 10%of Subsidy Requested for Land Acq. 5 ❑ 11%-20%of Subsidy Requested for Land Acq. 4 ❑ 21%-30%of Subsidy Requested for Land Acq. 3 ❑ 31%-40%of Subsidy Requested for Land Acq. 2 ❑ 41%-50%of Subsidy Requested for Land Acq. 1 4. Type of Project: Points: ❑ 100%Owner Occupied 5 X Mix Owner Occupied&Investment 4 ❑ Investment Property 3 5. Use: Points: X Retail 5 ❑ Office/Commercial 5 ❑ Mixed-use 5 ❑ Housing 3 ❑ Industrial 1 6. Type of Development: Points: X Redevelopment of Substandard Structures 5 ❑ Development of Vacant Land 3 City ofHuZo, Minnesota 7. Job Creation/Wage Level: Points: X 15+Full Time Equivalent(FTE)Jobs,$15-$20 per hour 5 X 10-14 FTE's,$10414 per hour 4 X 1-9 FTE's,$749 per hour 3 Employees ! Managers i Hourly Wage i I _Coffee Shop 6 2 $7.00-$16.00 i Restaurant Franchise 6 2 ' $7.00-$16.90_____ Florist/Gift Shop 4 1 $6.50-$13.00 Media Retailer �� 8 ( 2 $6.50-$16.00 Beauty Salon 10 2 $20.00-$40.00 �� Cell Phone Retailer 6 2 $10.00-$18.00 Sporting Goods_______] 5 ( 1 $8.00-$16.00 _Accounting Service 8 2 , $20.00-$42.00 Financial Service 8 2 $20.00-$50.00 _Real Estate Service 5 ( 1 $10.00-$25.00 Dry Cleaner j 4 1 ( $6.50415.00_ Health Service 1 6 2 $18.00-$34.00_T 8. Assessed Value: Points: X 7+times current 5 ❑ 6 times current 4 ❑ 5 times current 3 ❑ 4 times current 2 ❑ 3 times current 1 9. The project will pay annual property taxes in the first fully Points: assessed year of$73.250 50,000+5 35,000+4 20,000+3 10,000+2 Under 10,000 1 10. Likelihood that the project will result in unsubsidized,spin-off Points: development. High 5 Moderate 3 X Low l City of Hugo, Minnesota Sub-Total Points: 40 of a possible 45 points. 11. Bonus Points: Points: X The project will be 100%Pay-as-you-go TIF 3 points X The project meets the goals of downtown redevelopment 2 points Total Points: 45 Overall Project Analysis: 40-48 Points Max Remaining Term 35-39 Points 65-75%of Remaining Term 25-34 Points 40-50%of Remaining Term 15-24 Points 25-30%of Remaining Term 0-14 Points Not Eligible City ofHugo, Minnesota EXHIBIT A The principles of Development Partners, LLC have been involved in numerous projects ranging from residential to commercial properties. The projects have included but are not limited to Creekridge View located in White Bear Township. This SFR Development was built in 1993 including 28 executive lots. The SFR development named The Doth Addition was built in 1994 in Shoreview. Mendota Woods located in Mendota Heights was built in 1996 including 14 SFR lots. Hidden Lake Pointe Townhomes, built in 2004 in White Bear Lake. This development consists of 14 units including detached floor plans as well as twin homes. The Hidden Lake Office Park in White Bear Lake was built in 2005. This 8-unit office condo project consists of 3 separate buildings. The ponds of Ramsey, located in Ramsey began in 2001. This development included 120 Townhome lots and 82 SFR lots. Eagles Landing is located in the Bald Eagle Industrial Park in Hugo and is a 17,920 S/F Office Warehouse to be built. City of Hugo, Minnesota EXHIBIT B The proposed retail building will consist of approximately 23,000 S/F of space with a variety of suite sizes to fit the future tenants needs. The unique shape of this building which allows for strong visibility on Hwy 61 along with the plaza area and front door parking are just a few of the many attractive features to this building. We have noted some examples of tenants on the proposed plan in which we anticipate will be utilizing these spaces. We are forecasting business including but not limited to a coffee shop that may offer a small amount of sandwiches or bakery items as well as some sort of a small food business that may offer wine or beer to accompany its menu. The plaza area with outside tables will be very attractive to these types of vendors. We also anticipate businesses such as health and beauty retailer, cell phone retailer, physical therapist, message therapist as well as a gift or book store. The site allows for a variety of businesses and opens up the Hugo community to some that were not able to extend their business here in the past. The site also will allow for outdoor vendors such as local craft fairs, farmers markets and specialty items that are made locally. City of Hugo, Minnesota EXHIBIT C William A Lentsch Dale K. Dockendorf Remainder of Investors to be identified EXHIBIT D HUGO COMMONS PROFORMA EFFECT ON RETURN ON EQUITY INVESTMENT OF NO TIF .............................................................................................................................................................................................................................................................................................................................. WITHOUT TIF WITH TIF ................................................................................. .......................................................................................................................... ........................................................................................................... SQ FT RENT/SQ FT SQ FT RENT/SQ FT ..................................;................................. .............................................. ......................... .................................................;............................................................................................................ RETAIL 23,000 $16.80 $386,400 RETAIL 23,000 $16.80 $386,400 .............................................. ................................. .............................................................. ................................................. ........................................................................................................... TIF $0 TIF $59,143 ............................................. ................................ .............................................................. .......................................................... ........................................................................................................... TOTAL 23,000 $386,400 TOTAL 23,000 $445,543 .............................................. ......................... .......................................................................... ................................................. .................................... ....................................... ............................... VACANCY 10% $38,640 VACANCY 10% $38,640 ........................... ................................. ............................ ................................................. .................................... ...................................................................... EFFECTIVE RENT $347,760 1 EFFECTIVE RENT $406,903 .................................................................................. ............................................................... ................................................................................................ ...................................................................... RE TAX ON VACANCY $3.88 sq.ft. $8,924 RE TAX ON VACANCY $8,924 ................................................................................. ...................................................................... ........................................................................................ ....................................................................... CAM ON VACANCY $3.95 $9,085 CAM ON VACANCY $9,085 ................................................................................. ..................................: ............................. ........................................ .............................................................................. ............................... ........................... ................................i.............................i........ ................................................. ........................................................................................................... NO] $329,751 NOI $388,894 ......................................... ................................. ............................................................... ................................................. ..................................... ...................................................................... DEBT $326,252 DEBT $326,252 .............................................. ................................. .................................I............................. ................................................. ............................................................................ ............................... CASH FLOW $3,499 CASH FLOW $62,642 .......................................... ................................. ............................................................. ........o................................................. ............................................................................................................ EQUITY $853,490 EQUITY $853,490 r..............................................T.................................7....................................................................................................................................................................................................................................... RETURN **0.41% E RETURN **7.34% ................................................................................ .............................................................. ................................................. ...................................... ....................................................................... .......................................................................................................................................... BLDG VAL/SQ FT TOT VAL 23,000 $160.87 $3,700,000 COST: $183.85 $4,353,490 WITHOUT DE- VELOPER FEE DEBT AS PERCENT OF COST 80% DEBT $3,500,000 EQUITY $853,490 RETURN ON EQUITY GOAL 10% $85,349 DEBT PMT7% 20 YR $326,252 ...................................I........................................................................................................................ ** Need to get to a 10%annual return HUGO COMMONS PROFORMA EFFECTS ON RENTS OF NO TIF ................................................................................................................................................................ ...................................................................................................................................................................., WITHOUT TIF WITH TIF ............................................................................................................................................................... ................................................. € SQ FT RENT/SQ FT SQ FT RENT/SQ FT €..................................................:......................... ...................................._......................................€...... ................................................. ................................._.................................:............................................ RETAIL 23,000 € $20.10 $462,300 i RETAIL 23,000 € $16.80 : $386,400 ..................................................i..........................i....................................u......................................i......b.................................................o.................................' ' TIF $0 € TIF $59,143 ........................................................................... .................................... .............................................:.................................................i................................._................................................................................ € TOTAL $462,300 € € TOTAL $445,543 € E VACANCY 10% $46,230 : VACANCY 10% $38,640 i.................................................E..........................>....................................i.......................................i......o...................................................................................i..................................i............................................: € EFFECTIVE RENT $416,070 : € EFFECTIVE RENT $406,903 € i..................................................i........................._.................................... ......................................i......_..................................................................................._.................................?............................................. € RE TAX ON VACANCY $3.88 sq.ft. € $8,924 € € RE TAX ON VACANCY $3.88 sq.ft. i $8,924 ............................................................................h....................................C.......................................E......w...................................................................................h.................................f............................................i CAM ON VACANCY $3.95 : $9,085 CAM ON VACANCY `: $3.95 : $9,085 ..................................................i......................................................................................................i......a.................................................i.................................. ............................................................................... < ..................................................€..........................>................................................................................. .................................................?.................................i................................................................................. NOI $398,061 NOI $388,894 €............................................................................i....................................c.......................................i......a................................................. .................................6...............................................................................c DEBT $326,252 € € DEBT $326,252 ..................................................:.........................;.................................... ......................................;......;.................................................;................................. ............................................................................. € CASH FLOW $72,809 : CASH FLOW $62,642 ............................................................................i....................................i.......................................i......o.................................................a.................................i..................................i............................................ . EQUITY $853,490 : •. EQUITY $853,490 ..................................................€.........................€....................................`......................................i......a.................................................d................................. .................................€.............................................. RETURN 8.53% i RETURN **7.34% E E..................................................E..........................E....................................9...............................................:..................................................i.................................................................................................................. E .............................................................................................................................................................. BLDG VAUSQ FT TOT VAL 23,000 $160.87 $3,700,000 € COST: $183.85 $4,353,490 WITHOUT DE- VELOPER FEE E DEBT AS PERCENT OF COST 80% • DEBT $3,500,000 EQUITY $853,490 RETURN ON EQUITY GOAL 10% $85,349 E DEBT PMT 7% 20 YR $326,252 ** Need to get to a 10%annual return QU of Hugo, Minnesota EXHIBIT E Not known at this time. To be provided. City of Hugo, Minnesota EXHIBIT F All that pan of the North I r2 of the Northwest 1 iA of Section 29,Township 31,Mange 21,described as follows: Beginning at the intersa;tion of the South line of said tract and the Fast line of State highway No.61,as now widened to 111 feet; thence North 11 degrees M minutes East,along said Highway line a distance of 501.4 feet to the actual point of beginning of the tract to be described;thence Easterly and parallel with the South line of said North I12 of NW l r4 a distance of 400 feet;thence Northerly at right angles to last course a distance of 357.26 feet;thence Westerly and parallel with the South line of said North 112 of NW 1IA a distance of 325.23 feet to its intersection with the East line of State highway No.61,as now widened to 111 feet;thcncce South 11 degrees 51 minutes West along said Highway line a distance of 365.0 feet to the actual point of beginning,Washington County, Minnesota, City of Hugo. Minnesota EXHIBIT G See Attached Sworn Construction Statement. Sworn Construction Statement PROPERTY ADDRESS Frenchman Centre(Previous End Zone Bar) Hugo, MN 55038 23,123 S/F ITEM FURNISHED BY Development Shell Combined 1. Plans Caulfield&Associates $15,600.00 2. Survey& Engineering Alliant Engineering $21,400.00 3. Building Permit/SAC City of Hugo $45,000.00 4. Demo $61,490.00 5. Excavating/Grading $92,000.00 6. Footings $45,000.00 7. Foundation/Slab $71,000.00 8. Site Utilities $75,000.00 9. Asphalt $65,000.00 10. Reinforcing Steel Rebar $25,000.00 11. Curb&Gutter $15,000.00 12. Sanitary Sewer/Storm See Site Utitlities 13. Steel Framing $305,000.00 14. Interior Framing $35,000.00 15. Steel Joist See Framing 16. Waterproofing $15,000.00 17. Windows/Doors $65,000.00 18. Buildout Allowance $20/SF $400,000.00 19. Roofing $76,000.00 20. Insulation $23,500.00 21. Caulking $10,000.00 22. Acoustical Ceiling $80,000.00 23. Electrical $90,000.00 24. Plumbing/HVAC $200,000.00 25. Aluminum Entrances $200,000.00 26. Face Brick/Stone $125,000.00 27. Pavers $60,000.00 28. Interest $125,000.00 29. Phase I, Environmentals,Atty Fees $26,000.00 30. Conveyance Fee $5,000.00 31. Fire Sprinkler $46,000.00 Page 1 of 14 32. Garage Door $3,000.00 33. Landscaping/Retaining Walls $85,000.00 34. EFIS $163,000.00 37. Leasing Commission $210,000.00 38. Dumpster $2,500.00 39. Land Costs $1,070,000.00 40. Cont. Profit/Overhead $225,000.00 41. Closing Costs $80,000.00 42. Builders Risk Insurance $12,000.00 43. General Condition Site Supervision/Site Trailer/Etc. $85,000.00 TOTALS $4,353,490.00 Page 2 of 14 t� �s .r ,yea s- M1,¢ � f imp AMi � ■1 Ire CAULFIELD ARCHPTECfURAL DESIGN 1 --�_DITU SEMLE PROPERTY LINE ,EA 23,123 GSF QUIRED 124 SPACES 9 i WOO9388 ERIN COURT DBURY,MINNESOTA 55179 OVIDED 130 SPACES ! ! — — — — — — ji i I 1 TO:6S1.197.76 13T-21 B5 I I I 1 Fs 651459.1358 / I STORM W ITER i MANAGEMENT I cowsuTANr i ! I 37zei 2W 2W-0 j OEHTNRCATN3N I j iN9EfY4A,FYMI.B.1V11.EiFukl,,bN.d1 i i ! 1 PEPoR7 WIE R,@NKaeV,EMUMOBI N.pSCf co I i j 91vBMNt•14011NT1N1�MLYIE051E,® I I I i M W ECfEA iEEB xOR MFA 66 ME I � I i i i i ! is i� = m ii i bCOMMIS"NO. 07-18 !� i wi ••� I$ DRAWN BY BIG 9$/ 21 1 13 13 j CL w ClEial®BY. Bic /� /Lij a! ! % ( GATE Fdn"A M `iJ �l U, I b ! ---------------------•----- I wrm DATE f � I J 0 y 1 11 I i REAWN DATES ,9 1 ----_---------------------- �' f i 9 1 --------------------- f I I I � PROJECT TITLE I I I I l i RETAIL PROPOSAL 1 I --------------------------- I HUGO,MINNESOTA OwN61 12Z-O' ArO 1 I 1 — 1 I 1 1 I I I SHEET TIME �---------------- ------••-•-----••--' I L------------ —•---•----- ———=——— ————•—•-------------- ---------------------- --—•—•---•—•---•—•— 3P• , I o�E 1 36P-1710 I , j Al 1'=70-P SITE PLAN S 1 SHEEF NO. SHEEF , OF 1 :3, CM) CAULFIELD ARCHITECTURAL DESIGN El MECHANICAL 705 SF 23,123 GSF 9m BAN cmw TENANT A TENANT 8 TENANT C TENANTO TRASH WOODBURY,WINBOTA VAN 2240 SF 140D SF 1400 SF 2379 SF 400 SF Td 651.497.7685 F.. 6514W359 TENANT E 2315 SF CONSULTANT ............ O -44 ................. ..................j TENANTIF T=l 14W SF El ED CERWICAT01 TENANT G 1750 SF ........... sm 1:3 TENANT H 2ffi5SF DRAM p BAC CHEOM W FINS DATE 7gum—24 2X6 L------ OWSSUEDATE, FIEVISION DATES --------------------------------------------------------------------- TENANTI 1400 8F PROJECT nTLE RETAIL PROPOSAL TENA14TJ 1*0 SF HUGO,MINNESOTA . .................................................... 4ERY TENANT K OWNER 400 SF ---------- :-VARF U� ............................................................. TENANT L 2240 SF SHEET TITLE FLOOR PLAN ------------------- R),FL R PLAN Al SHEET NO. SHEET 1 OF 2 L 11.0.-_-1111a11 1_uIPlM I Igo,II'll -- "Al ORffiR NEla IN, malsominumn MUNNIX NEEMEN NO El- 0. om ---_--------- i E i 11 i I WEE =_ WINE ME. -------------- -----____________ ------------ IT ��u�� .� ® nnnnnununnnn �nunuummmmu, REM r-lon ' IlrrIu��i ' iia�i��. I n�i � � Iii uiu a ' moi 1Udiiiiee ��n�� o �u�i i��.1s�i" I�ow'1 "��uu�'��'M'aXMIS, '.o��"�"�Nm'1� .��.�.�'��i��'.NMI��u. 1 HCity of ugo 14669 Fitzgerald Avenue North, Hugo, MN 55038 (651)762-6300 www.ci.hugo.mn.us July 18, 2008 To: City of Hugo Businesses The City of Hugo has created a new page on our City website, which lists properties for sale and lease in Hugo. This page can be accessed by placing your cursor on business info (located near the top of the page), then economic development, commercial/industrial opportunities, and then click properties for sale and lease. On this page you will find information on the property's location, as well as a picture, description, and contact information. All commercial and industrial property owners in the City are welcome to post listing on the City website. If you have property that is for sale or lease and want to showcase it on the City website, please contact me at rsimone cgci.hugo.mn.us or (651) 762-6304. Also, the city of Hugo Economic Development Authority (EDA) has formed a new subcommittee entitled Business Retention and Expansion committee (BR&E). Hugo businesses are at the heart of this committee and their mission is to retain businesses through communication and education. In order for the committee to better tailor their efforts to your businesses needs please go to city website and fill out and submit the business profile questionnaire that is located under the EDA portion of the City website. Also enclosed is the business profile questionnaire that can be filled out and sent to the City. The BR&E subcommittee is dedicated to providing help to businesses and answering questions that a business may have. If you have any questions or comments please contact me at rsimoneAci.hugo.mn.us or (65 1) 762-6304, thanks. Sincerely, Rachel Simone Associate Planner City of Up Business Retention & Expansion Subcommittee Business Profile Questionnaire Business Name Business Location Number of Locations Number of Employees What are possible areas you could use help on? (Circle or Check as many as needed) Attorney Questions Finance General Computer Help Website Design Help Incorporating Business Market Study Business Case Study Marketing Networking Accounting Computer Information Systems ( Microsoft Applications) Other: What are your thoughts about expanding your business's day to day operations? Questions/Comments/Concerns Please send finished business profile questionnaire to: Hugo City Hall Att: Rachel Simone 14669 Fitzgerald Ave N Hugo, MN 55038