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Tax increment revenues from a Tax Increment Financing District are a source of funds that could assist to close
<br />a financial gap in a project. When reviewing a request for financial assistance, the financial gap is driven by project
<br />costs that cannot be supported solely by the project alone and typically justify the need for public financial
<br />assistance. The additional cash flows from tax increment and/or grant funding provides additional sources as
<br />necessary to allow for the project to proceed as proposed. The project as proposed will include reduced rent
<br />levels as related to the affordable housing units. The developer has stated in discussions with City staff that the
<br />receipt of City financial assistance is necessary for the project to proceed based on current financing limitations
<br />and has provided supporting financial information illustrating the financial gap.
<br />
<br />The total development costs from the developer’s financial materials are illustrated in the table on the following
<br />page.
<br />
<br />Table 1a: Funding Sources and Total Development Costs (original submittal)
<br />
<br />Funding Sources Amount Total Development Costs Amount
<br />First Mortgage 17,158,000 Acquisition 1,500,000
<br />General Partner Cash 100 Construction 24,144,979
<br />Syndication Proceeds (Tax Credit Equity) 13,753,469 Environmental Abatement 3,500
<br />Sales Tax Rebate 563,383 Professional Fees 1,645,374
<br />Energy Rebates 35,000 Developer Fee 3,500,000
<br />Met Council LCDA Fall 2024 490,000 Syndicator Fees 10,000
<br />Ramsey County HRA – round 1 750,000 Financing Costs 2,848,921
<br />Ramsey County HRA – round 1 750,000 Reserves 941,752
<br />Met Council LCDA Fall 2025 910,000
<br />TIF * 0
<br />Deferred Developer Fee 234,575
<br />Total 34,644,526 Total 34,644,526
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<br />‘* TIF is included in first mortgage amount. The developer has estimated an additional $963,000 in first mortgage
<br />debt could be obtained with tax increment financing pledged by the City.
<br />
<br />Table 1b: Funding Sources and Total Development Costs (updated proforma submittal)
<br />
<br />Funding Sources Amount Total Development Costs Amount
<br />First Mortgage 16,767,001 Acquisition 1,500,000
<br />General Partner Cash 100 Construction 24,144,979
<br />Syndication Proceeds (Tax Credit Equity) 12,927,595 Environmental Abatement 3,500
<br />Sales Tax Rebate 519,042 Professional Fees 1,645,374
<br />Energy Rebates 35,000 Developer Fee 3,500,000
<br />Met Council LCDA Fall 2024 490,000 Syndicator Fees 10,000
<br />Ramsey County HRA – round 1 750,000 Financing Costs 2,848,921
<br />Ramsey County HRA – round 1 750,000 Reserves 941,752
<br />Met Council LCDA Fall 2025 910,000
<br />TIF S/T Utility Note* 173,000
<br />Deferred Developer Fee 414,873
<br />Total 33,736,610 Total 33,736,610
<br />
<br />‘* following City Council workshop on TIF for the project, the structure has been adjusted to reflect reduced
<br />assistance and varied structure.
<br />
<br />Tax increment financing has been identified as a tool that may be considered as pay-as-you-go from a new
<br />housing tax increment district as reimbursement for eligible costs. The tax increment revenues would provide
<br />additional cash flow to support an increased first mortgage debt amount. The developer will use traditional
<br />affordable housing funding sources including tax credit equity and debt to finance initial project costs
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