06-11-2025 Workshop Packet - Laserfiche WebLink

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Memo To: Laura Linehan, Acting City Administrator Ben Harrington, Community Development Director From: Mikaela Huot, Director Date: June 5, 2025 Subject: Preliminary Financial Analysis for proposed Tax Increment Financing Housing (TIF) District (Lupe Senior Housing Rental Housing) Background The City of Little Canada has received an application for financial assistance through Tax Increment Financing (TIF) from Little Canada Apartments, LP as related to construction of an approximate 106-unit senior housing project comprising of studio, 1- and 2-bedroom units with rent and income limits. The average income of all 106 units is estimated to be 56.51% and comprises a mix of 30%, 50%, 60% and 80%. 10% of the units (eleven) will be at 30% area median income. The total development cost of the project is approximately $34,644,526 and is anticipated to be financed with a combination of first mortgage debt financing (supported by project cash flow and tax increment revenues), tax credits, deferred developer fee and grant funding from Ramsey County and Metropolitan Council LCDA. The developer has identified tax increment financing as a potential financing tool that could provide additional cash flows to the project, resulting in an increased first mortgage debt amount. For preliminary financial modelling purposes, the developer has estimated the maximum 26 -year term of a housing TIF District could support an increased first mortgage of approximately $963,000 with 5.5% interest rate. Developer Request for Assistance The developer has requested financial assistance from the City through tax increment financing for an estimated amount of up to $963,000, which is based on the estimated maximum amount projected to be available that could increase the first mortgage amount from $16,195,000 to $17,158,000 as illustrated in the sources and uses table on the following page. A term of assistance that is less than 26 years would result in a reduced first mortgage amount and would require one or more alternate sources to fill a financial gap based on current total development costs and identified funding sources of the project. Tax increment revenues from a Tax Increment Financing District are a source of funds that could assist to close a financial gap in a project. When reviewing a request for financial assistance, the financial gap is driven by project costs that cannot be supported solely by the project alone and typically justify the need for public financial assistance. The additional cash flows from tax increment and/or grant funding provides additional sources as necessary to allow for the project to proceed as proposed. The project as proposed will include reduced rent levels as related to the affordable housing units. The developer has stated in discussions with City staff that the receipt of City financial assistance is necessary for the project to proceed based on current financing limitations and has provided supporting financial information illustrating the financial gap . The total development costs from the developer’s financial materials are illustrated in the table on the following page.