06-23-2025 Workshop Packet - Laserfiche WebLink

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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 o Estimated $200,000/unit for 106 total units o $21,200,000 total taxable value • Incremental value based on difference between existing and new land/building value • Construction commences in 2026 and is completed in 2027 o Project values 100% complete for assess 2028 and taxes payable 2029 o Delay first increment until payable 2029 • Net present value (discount) rate of 5.5% • 2% annual market value inflation Table 2a: Estimated Tax Increment Revenues based on 26 Years Preliminary revenue projections based on maximum 26-year term Existing Base Land Value $264,100 Estimated Total Taxable Value $21,200,000 Estimated annual available increment (full buildout) $59,162 Total gross tax increment (26 years) $1,997,787 City retainage (10%) $199,777 Net amount available for development (90%) $1,798,010 Estimated Present Value Revenues (26 Years) at 5.5% $800,128