An unusual financing option is helping attract a new hotel to Ramsey.
The Ramsey City Council unanimously approved a purchase agreement and preliminary tax increment financing agreement that are the first steps to bring a new hotel and restaurant into The COR. Additional presentations, including a public hearing, will come before the council in the future.
The COR is Ramsey’s mixed-used downtown development designed to be urban and walkable.
The proposed hotel will be four stories and have 60 units and a ground-level restaurant focused on serving dinner. Brian Wagernese, president and CEO of Cobblestone Hotels, described the restaurant as an a-la-carte steakhouse with additional food options and craft beer on tap.
Cobblestone Hotel Development LLC has been negotiating with Ramsey over the last six months for the land off Sunwood Drive Northwest between Zeolite Street Northwest and Yolite Street Northwest.
“What’s unique about this transaction is how the city pays itself back,” Community Development Director Tim Gladhill said.
The TIF district is a reversal compared to how the city usual implements the financing tool. Instead of receiving the land payment up front and giving the purchaser a TIF note to gain back the cost, the city will sell the land for $1 and then recoup those costs over the next nine or 10 years, Gladhill said. If the development isn’t complete on time, the city will have the right to reclaim ownership of the land.
The final size of the location could vary based on land to the west that is currently under contract by GiGi’s Salon. Staff expects the salon may slightly shrink how much land it needs and the hotel may increase it’s acreage, according to city documents.
Cobblestone agreed to a $5 per-square-foot valuation for land and is expecting to purchase between one-and-a-half acres to two acres, depending on how much land is needed. The total value of the sale is estimated between $326,700 and $453,600, according to city documents.
“With tax increment financing (the money is) collected in a district versus being distributed to the city, the county and the school district, so it’s a tool for the city to use to capture those dollars within a defined geographic boundary,” Gladhill said.
The estimated tax assessed value of the development will be $4.25 million, and it will bring in an estimated $139,000 annually in property taxes. The project also adds lodging, a restaurant, a pool for hotel guests, approximately 25 new jobs and increased commerce in The COR, according to city documents.
Ramsey is part of the hotel’s expansion into Minnesota, along with a franchise recently opening in Hutchinson, Wagernese said.
“This particular building fits within your COR district, which I think it really ties into what you’ve done here,” Wagernese said.
Cobblestone is based in Neenah, Wisconsin, and has more than 130 locations in 27 states, according to the hotel’s website.
“I think this hits a lot of the buttons ... of things that we’re looking for in Ramsey — bringing in a good business into The COR, it sounds like it’s a needed business,” Council Member Chris Riley said. “It’s a much needed restaurant, eating place, that our residents keep asking for.”