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Memo – Draft To: Laura Linehan, Acting City Administrator Ben Harrington, Community Development Director From: Mikaela Huot, Director Date: June 23, 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 has been updated from the original submittal included with the application for TIF assistance. The original total cost was $34,644,526 and the updated total cost is now estimated to be $33,736,610. The funding sources remain the same, with some updates to estimated amounts and include 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 on the following page and included in the original sources and uses as listed as Table 1a. 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 fil a financial gap based on current total development costs and identified funding sources of the project. The City Council discussed the request for assistance at the June 11 City Council workshop. The request was to structure a reduced term of tax increment assistance that would focus on public benefits of the project and ability to finance certain identified costs that could be considered extraordinary. The lift station and force main infrastructure improvements will be required for the project to proceed. The housing project’s estimated cost allocation of the total project cost is approximately $200,000. As a result, we have provided an alternate scenario illustrating the projected tax increment revenues based on financing of up to $200,000. The developer has also modified the total development costs of the project based on additional project details, as well as applicable funding sources to reflect the current market environment. The updated sources and uses are listed as Table 1b on the following page. The modified sources and uses table reflect the adjusted structure of the potential tax increment financing assistance.