HomeMy WebLinkAbout5A - Waterfront Passage Business Park Proforma Report
AGENDA#:
PREPARED BY:
SUBJECT:
DATE:
PRESENTATION:
att.
STAFF AGENDA REPORT
;~K BOYLES, CITY MANAGE~)\1
CONSIDER REPORT FROM EDA PR~DENT BOB
BARSNESS AND ADVANCE RESOURCES
CONSULTANT ROGER GUENETTE REGARDING
WATERFRONT PASSAGE BUSINESS PARK
PROFORMA.
December 15, 1997
On January 5, 1998, the City Council is scheduled to
consider a modification of two Tax Increment Financing
Districts and the creation of a third. The purpose of these
actions is to complete the development of the Waterfront
Passage Business Park. The Tax Increment Financing
District modifications would facilitate the sale of a one
acre parcel to Tony Shank of NBC products, which would
provide for a 14,000 square foot addition to his property
and the second modification would allow for the sale of a
1/2 acre parcel to Gary Horkey of Keyland Homes to
facilitate an expansion of up to 15,000 square feet. The
new Tax Increment District is proposed to allow for the
development of the final parcel in the business park,
which is 4 1/2 acres in size. The construction of a 55,000
square foot parcel is anticipated on that property by
Robert Foods.
If the Tax Increment Actions referred to above are
approved by the Council, all parcels on the Waterfront
Passage Business Park will have been sold, developed, or
optioned. Completion of this property is a milestone in the
Business Development of the City of Prior Lake.
Accordingly, I have asked Roger Guenette to prepare the
attached memorandum and spreadsheet to provide the
Council with financial information on the City's original
objective and the anticipated financial status of the
business park. Economic Development Authority
President Bob Barsness will be present to provide
historical perspective to the City Council on this important
project and Roger Guenette will explain the short and long
range expenses and benefits of the Waterfront Passage
Business Park.
16200 Eagle Creek Ave. S.E.. Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
DEC-10-1997 17:59 FROM ADVANCE INC.
TO
PR lOR LAKE-C ITY
P.02
DVAIICE
TO:
Prior Lake BOA & City Council
FROM:
Roger Guenette
DATE;
December 8, 1m
RE:
Economic Impacts of WaterFront Passage Business Park
The EDA has approved the execution of two purchase agreements and an option agreement to
convey the final 3 parcels of property in WaterFront Passage Business Park. As each property in the
park has been successfully marketed, the transactions have been analyzed in comparison to the initial
pro forma data put forth for the development. The original objectives endorsed for the business park
anticipated a 10 year development time frame and called for reimbursement of 90% of the City's initial
investment. Pending the sale of the final three parcels in the park, the City will have completed the
development in less than 5 years and may realize a return of approximately 49% in excess of the original
investment. Enclosed herein is a summaI}' pro forma overview of the entire 33 acre development and
additional information regarding the economic impacts on the community.
The pro forma summary includes actual inputs for City expenditures incurred/obligated to date
including estimates of future LGA losses and a 10% contribution of unrestricted funds to enable
utilization of TIP proceeds. The expenditures obligations total $1.805.791. Offsetting these
expenditures/obligations are revenues from land sale proceeds, developer contributions, grant receipts
and tax increment proceeds. Based upon assumptions relating to finalization of the land transactions
and proposed development projects on the three remaining parcels (including receipt of a $200,000 grant
from MnDTED) the CitylEDA will successfully fund all of the $1,805,791 and realize approximately
$883,000 in additional in revenues. The full amount of the estimated cash flow will not be available
until the termination of the last TIP District (No. 2-9) in 2009.
The ability of the CitylEOA to have suc:eessfully developed WaterFront Passage Business Park is
linked to the utilization of tax increment financing. The tax increment program has been used to
undeJWrite land, soils correction and infrastructure improvement costs for both the City and developers.
All of the occupants in the park are small, emerging businesses that would not have been able to
leverage the necessal}' debt financing without the equity and/or cash flow contribution available through
the tax increment program. These businesses are likely to fill a significant role in the long term
economic stability of the community.
A summaI}' of the economic impacts relating to WaterFront Passage Business Park are as
follows:
Total Building SF
R/E Tax Generation/yr
lobs CreatedIRetained
Estimated Annual Payroll
Revenues in Excess of
Expenditures
196,900
5315,000
177
$4,500.000
$883,000
Business Finance and
Economic Development
Specialists
C()rlPOflA'fE O~HCES:
P.O. Sox 32009
Mpls.. MN 55.tl3:!-0609
Phone: (612) 755-5393
Fax: (e.1:() 755-7741
P.O, Box 3027
Mankato. MN 56002.3027
Phone; (507) 3fl7-71 17
Fax: (507) 387-6115
DEC-10-1997 17:59 FROM ADVANCE INC.
TO
PR lOR LAKE-C ITY
P.03
Prior Lake EDA & City Council
December 8.1997
Page 2
These economic impacts have resulted from the EDNCity's initiative in converting a vacant. low
lying 33 acre parcel into a quality business park development. Prior to the onset of this development,
there was no discernable interest on the part of the private sector to undertake business/industrial
development within the City. At the present time. there are two private developers actively engaged in
developing 100+ acres for additional business/industrial utilization.
The Success of WaterFront Passage Business Park will yield ongoing eoonomic benefits to the
community (i.e. tax base enhancement, additional jobs and related ec:onomic multipliers). The vision
and efforts of the EDA. City Council and Business Development Committee haye yielded these positive
results in less than one half of the time anticipated.
-. . ..
,'.--" .:.' .~ ;- ".-.. "-. ~_._-
CJ1Y OF PRIOR LAKE
WA1ElFRONT PASSAGE COSTIPRICE PROFORMA
DeweI('lDllltlll Cost
ImprovemtlllJ 51.014,42)
LandhrdJase 184,794
Land Monp~ )nterul 2j,741
Bond InlCreJl ll5. 131
LGA L05slLoca)
ConuibuliOllJ ..lWm
Nd Cil)' o,m 1,8O!,19J
Dwdopable ADu 211
!)e.dopab)e Square Fut 871,200
A WARD Phue D Phas1: D
Un~ Sale SUmma1Y Ke\'land HDllles Bed.-er Artnl American Olan Metro Cebioo E M J'ro.ducu }I.'!lC J'roducu frin!iI!i loom LL C. Ke\olud Hamel NBC I'roductl Robuu J:oock mw.
Bel1dinl Square .F<<t 18,000 6~ .5,000 5,000 2!,8lXI 19,.200 33,DOO 12.000 14,000 ~OOO 1 Pti,IlOO
Aau 1.7 1..2817 0.5 0.6759 J.Q7 1.8:3 l.ll L78 .53 I.oJ 4J 20.54
Lalk1l'111thue CosI 142,91O 100.753 42.03S 56,&23 .304,92.4 153,8S0 267.46J J.58,175 56.2.50 89.7:S0 399,880 ),779,823
un Down Pa)'Dlml (3,sOO) (4S,470) (3.soo) (U3O) (55,JOO) (67.500) ()27.m ) (7D,&.J6) (6,2S4) (4O.2A5) ( 188.500) (616,476)
JIIIy lP96 pIltmtnl (11)33) (S2,776) · (7O,J09)
Dulunbc.r J", pI)'IlIctll (17JJ2) (17))2)
S<iJ CondOR bJ OIJ .wrlD 38,.ID 4Wi 2) 4,959 86,.)50 49,sos J,tg -&QI!JI
SubtoEII 1S4,41O 62.W 139.492 BB,m (2. 780) 246,3m 1,125,lI06
Olllu 0., DrptDN
Rdmbuncmellt SaIl Coneetions 22,360 22)60
Reimblrsc.menl S'IlrYef' IIlll SoD Ilorinp 1.soo 1.soo 2.774 3.(8l .3.000 .3.000 U,774
Comuld!ll Feel 7.$00 7,500 3, 750 3,7$0 11.000 7..500 7,.500 7,500 3,7S0 ',7SO 7,$00 69.000
up! Fees .500 500 300 300 SOO .soD l,OOO 2,500 ),000 1.<<Kl 2.OOlI 11.100
Tnk Work, Retlllrdin.. E1c. 166 678 .500 ~ 500 2,U4
Lea De\'dopu Jlelmbummelll ----0 Q.&lQ) ~ a..:z.tm aJ.lm ...1.lJ!!lU (1.5001 (7..500\ ....J.Z.Sm ...l3.JJPJ ....a.s.l --c&ml
S'ubtolll Otber City &paise 8,166 2lUJ8 UOO 1,800 4.774 .soo 2.000 5,500 ~) 4.soo 5.500 tlO,l2I
Grad 7....) . 1U Rdmtlu.nab1e 1O,5N 90,111 4Cl,w .50,03 JI',T.!J 16,U0 If""} Jl.QJ {s,oJD} 54,005 1S1,8IMI 1,18" '7U
Euimated Tu IDcmtIctllProcce4r W,OOO 100,.22A 7,lA'X! 73,000 m,2O& 29S,400 47S,200 1J3,QSO 73,<<4 en J71,415 2A81.9B1
Less LOA Pmalty ~) (61,500) 0 0 0 0 0 (67.soo)
Less IlHIi lIMtn"baliClllIll UllJe.s~ut F\mcls 0 (1 D,OlS) (7,300) (7,300) ( 41))20) (29,.s40) (47,500) (J 9.J05) (1.344) (n,I") (225,779)
Lm par ar you eo 0 cr" (Pti.OOO) ()Ol>4O) (11)70)
Lu6 AcqWsidoa 0 0 0 0" (JO,OOO) (J 0?.?oo) (05,110)
SoD Cotrccrioo 0 0 (1.200) (1,200) 0" (I O. 0 0 0 0 (14,400)
EDA O:IIItdbvt1oD (frOlD Developer) ----0 ~ 0 ~ ~ ----0 ----R ----ll --.Q .....um ..JW.A -W21
Net Tu lnemDeot A"IlIabJe 157,500 90,199 58,500 58.SOO 362,888 1~860 216,.360 J62.J7S 0 69JJl 464,126 1,819.899
(WI) 184,854 --.J! -..ll --.Q ~
Net Galli (Loss) 10 Oty (lS,08') IJII,IO a.e" 1)4!,W 1IJ,oIO sa.7.U SS,ll!O 115,181 Wl,JAI jW,!U
0aiDIL0a per lolJUUf, Joot . Loll (S-01) (Ult) UJ 1.27 1.91 11.0. 1.63 1.89 l.2l S.JS 11.0& t.7J
Odlef fulJdiJI. Sourw . DIED ~ .50,000 1OOhOO 2SO,000
Cumlllativt. OalJdou (8,08') (SS, 708) (1I1,U1) W~ IUS,. UH,69I mt,564 suo.sOl WSJU S473,Sl' 1AJ.764 SlW, 7"
· ToW 01 S1D,oso Annual paymUlU 1l1!18 - 2003
.. Contlngc:o. UaIlllil)' 10 be paid onlJ In tlJe eve1Illllar TIP uvenues ~ ,"ojediDllt. In thjl evef1llhe Dwdoper would reocive ,dditiooal rclmbllrsemenl, but !he Ory fIOGlll JlO1 aperie-noe 'ny
TWuc:OOtt ill net r~ues lIS deplau berein.
on J\'eI TIF leu COIlIDOO1l0D felr fiscal cfisparilies