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FEB. 5. 2002 1 :04PM EHLERS & ASSOCIATES NO. 6471 P.3
<br />Summary of Sherman & Associates' Request for TIF - February 5, 2002
<br />Ehlers & Associates
<br />Apartments over Retail
<br />Q Total project cost of $13,300,000, excluding townhomes
<br />❑ First mortgage financing is through a 40 year FHA insured loan.
<br />❑ Sherman's pro forma assumes an allocation of tax - exempt bonds is received from the State of
<br />Minnesota to allow a net interest rate of 6.7 %. Tax - exempt bonds may be difficult to achieve
<br />given competitive nature of the bond allocation.
<br />❑ 80 apartment units - it appears that 20% of the rents are affordable at 50% of median income to
<br />qualify for the bonds and for a housing TIF district. 1 did clarify with Mr. Sherman that the rent
<br />structure will need to be changed to fit with the remaining portion of the assumptions in the
<br />sources and uses to allow another 20% of the rents at 60% or less of median. For 'BR's, the
<br />60% rent is $840 per month and for 2BR the rent amount is $1,008. These rents are scheduled to
<br />increase within a month, which will allow higher limits.
<br />❑ Affordable units include 16 - 1 bedroom units with rents at 50% of median and incomes at 60%
<br />($32,000 for one person household, $36,000 for two person household) and an additional 16
<br />units at 60% or Tess of median income.
<br />❑ Rents for market rate units range in $1.05ls.£ or 5900 for 1BR, $1,125 for IBRtDen, and 51,250
<br />for 2BR.
<br />❑ 25,000 s.f. of retail under the housing assuming rent of slightly less than $10/s.f. Upon further
<br />discussion, Mr. Sherman indicates that the leasable space would be 15,000 to 17,000 s.f. plus an
<br />additional 6,000 to 7,000 s.f. of community space.
<br />❑ Other funding sources include Ramsey County HOME funds ($260,000), deferred fees, and tax
<br />credit equity.
<br />❑ Request for assistance is all TIF produced by rental housing ($90,000 per year) to be financed on
<br />a pay -as- you -go basis for 25 years, estimated to equal a present value of $1,000,000. This
<br />assumes a housing district with little or no base value.
<br />❑ Developer indicates that rental /retail could pay 5300.000 for land.
<br />Townbonres
<br />❑ The developer has proposed up to 91 for sale townhomes with sales prices from $165,000 to
<br />$185,000.
<br />❑ The developer has indicated that he could purchase the townhome lots for $10,000 to $15,000
<br />per unit, depending upon soils conditions and stormwater conditions.
<br />❑ The developer is not requesting tax increment for the townhomes.
<br />Analysis
<br />Q The present value of tax increment for the commercial portion of the development and the 91
<br />units of townhomes, assuming a 7% interest rate, a three year build out and an average value of
<br />$165,000 is approximately $L090,000. Land sale proceeds assuming 510,000 per lot is
<br />approximately $910,000 for a total proceeds of approximately $2,000,000.
<br />❑ Additional tax increment from the Presbyterian Homes development could yield approximately
<br />$250,000 to $350,000, depending upon interpretation of the five year rule. These funds could be
<br />devoted to writing down the cost of the housing district and increasing the amount that the rental
<br />housing could pay for land to $550,000 to $650,000. Therefore the total proceeds available from
<br />the 91 unit townhome development and the rental over retail could be up to $2,650,000.
<br />❑ The developer has waived any development fees on the rental housing portion. We did not
<br />request the expected amount of the developer fee on the townhomes.
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