06-11-2025 Workshop Packet - Laserfiche WebLink

Home Browse Search

Table 1: Funding Sources and Total Development Costs Funding Sources Amount Total Development Costs Amount First Mortgage 17,158,000 Acquisition 1,500,000 General Partner Cash 100 Construction 24,144,979 Syndication Proceeds (Tax Credit Equity) 13,753,469 Environmental Abatement 3,500 Sales Tax Rebate 563,383 Professional Fees 1,645,374 Energy Rebates 35,000 Developer Fee 3,500,000 Met Council LCDA Fall 2024 490,000 Syndicator Fees 10,000 Ramsey County HRA – round 1 750,000 Financing Costs 2,848,921 Ramsey County HRA – round 1 750,000 Reserves 941,752 Met Council LCDA Fall 2024 490,000 TIF * 0 Deferred Developer Fee 234,575 Total 34,644,526 Total 34,644,526 ‘* TIF is included in first mortgage amount. The developer has estimated an additional $963,000 in first mortgage debt could be obtained with tax increment financing pledged by the City. Tax increment financing has been identified as a tool that may be considered as pay-as-you-go from a new housing tax increment district as reimbursement for eligible costs. The tax increment revenues would provide additional cash flow to support an increased first mortgage debt amount. The developer will use traditional affordable housing funding sources including tax credit equity and debt to finance initial project costs Project Financing There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay - as-you-go basis. With upfront financing, the City would finance a portion of the developer’s initial project costs through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and used to pay debt service on the bonds or repayment of the internal loan. With pay -as-you-go financing, the developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service payments and would have to use other sources to fill any shortfall of tax increment revenues. With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment revenues are not sufficient. The developer’s request for assistance is through the establishment of a new tax increment financing housing district as a pay-as-you-go note. This method would provide additional annual cash flow to the project and subsequent increased debt financing amount as the remaining funding source to close the financial gap. Additional details related to the tax increment revenue estimates from a new housing district are included under Tax Increment Revenue Assumptions. Tax Increment Revenue Assumptions Certain assumptions were made based on the value of the project, construction schedule, and anticipated financing terms to estimate tax increment revenues: • Total existing value of $264,100 o Parcel ID: 072922430003 o Base value as of Jan. 2, 2025 o Original net tax capacity (ONTC) of $660 o Assuming reclassification as residential rental low-income 4d of 0.25% • Estimated total market value upon completion