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FEB, 5. 2002 1:05PM EHLERS & ASSOCIATES NO, 6471 P. 5
<br />Summary of MetroPlains Request for TIF - February 5, 2002
<br />Ehlers & Associates
<br />Apartments over Retail
<br />❑ Total project cost of $10,600,000, excluding townhomes
<br />❑ First mortgage financing is through a 40 year FHA insured loan taxable loan..
<br />❑ 80 apartment units, all at market rents. Rents for market rate units range from $950 for 1BR to
<br />$1,100 for2BR.
<br />❑ MetroPlains indicates that the leasable space would be 14,000 s,f leased at approximately $9 /s.f.
<br />❑ No other funding sources assumed at this time, but the developer has indicated that it will seek
<br />other funding sources from Ramsey County,
<br />❑ Request for assistance is $650,000 T1F. Because the development assumes market rents, the
<br />existing redevelopment is assumed to be utilized..
<br />(3 Developer indicates that they as assuming no land proceeds would be available, unless other
<br />funding sources were secured.
<br />Townhomes
<br />❑ The developer has proposed up to 42 for sale senior - oriented townhomes with sales prices
<br />averaging $200,000.
<br />Analysis
<br />❑ The present value of tax increment for the rental housing, the commercial portion of the
<br />development and the 42 units of townhomes, assuming a 7% interest rate, a three year build out
<br />and an average value of $180,000 Is approximately $1,350,000. After subtracting the $650,000
<br />for the MetroPlains request, the net tax increment is $700,000.
<br />❑ Additional tax increment from the Presbyterian Homes development would not be available
<br />unless some affordability was in place for the rental housing. Dropping the rent on 16 two
<br />bedroom units to meet affordability would result in approximately $17,500 less in annual income
<br />or $200,000 less in mortgage proceeds. Using 20% affordability may also allow other funding
<br />such as the Ramsey County funds, which could compensate for the lower mortgage amount.
<br />❑ The affordability would also allow for a potential housing district for the MetroPlains project.
<br />The additional tax increment for the extra 8 years could amount to $200,000.
<br />❑ The sources of funds would increase, therefore, to:
<br />❑ TIF - Townhomes, Rental & Retail 700,000
<br />O Additional TIF with housing District 200,000
<br />TIF - Presbyterian Homes (City funds): 250,000
<br />Total Sources $1,150,000
<br />❑ The MetroPlains proposal assumes a developer fee of $1,200,000 fug tlm , cntal Md tew,iltemc
<br />development. Net equity for the rental housing would be $1,600,000. Annual income is
<br />expected to be $75,000 to $125,000 per year, which meets industry standards for this type of'
<br />development.
<br />Summary:
<br />Much of the differences in the two proposals is the "packaging ". Sherman has assumed the use of tax -
<br />exempt bonds for the rental portion of the development. If Sherman were not able to qualify for tax -
<br />exempt bonds, .his total sources of funds would likely be equal to or slightly less than the MetroPlains
<br />sources, given the loss of $765,000 in tax credits and the higher mortgage interest rate, even with a
<br />higher density of townhomes. MetroPlains has included the townhomes and rental portions of the
<br />development and disclosed all fees and costs on the entire project. The costs of construction between the
<br />developments are similar, with MetroPlains assuming higher home sales.
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