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<br /> <br /> <br /> <br /> <br /> <br /> <br />MEMORANDUM <br /> <br />TO: Michael Grochala, Community Development Director <br /> <br />FROM: Mikaela Huot, Vice President/Consultant <br /> <br />DATE: July 1, 2016 <br /> <br />SUBJECT Proposed Tax Increment Financing (Economic Development) District No. 1-12 <br /> Project Summary Memo <br /> <br />The City of Lino Lakes received an application for financial assistance through Tax Increment Financing (TIF) with <br />financing a portion of the extraordinary development costs related to the development of a large 402,000 square foot, <br />office headquarters and warehouse building for Distribution Alternatives. The developer, United Properties, is <br />proposing the construction of the project as the tenant (Distribution Alternatives) has outgrown its current space and <br />needs expansion. The purpose of this memorandum is to provide a summary of Springsted’s review of the <br />development project costs and operating pro forma as provided by the developer in order to assist the City with <br />making a determination if the project as proposed would be unlikely to proceed “but-for” the requested Tax Increment <br />Financing (TIF) assistance. <br /> <br />Background <br />The developer submitted a request for TIF assistance with the purpose of using tax increment to finance <br />extraordinary costs associated with construction of the project. The new assessed value of the building has been <br />estimated to be approximately $18.2 million upon completion based on an approximate 402,000 square foot facility. <br /> <br />Developer Request for Assistance <br />Assistance has been requested for financing a portion of the costs associated with construction of the project. The <br />developer has proposed the $24 million project will be funded by an estimated $6.5 million of equity and $15.3 million <br />of private financing with a TIF request of $2.088 million to finance extraordinary project costs. The City’s preference <br />would be to provide any financial assistance through pay-as-you-financing as reimbursement for extraordinary <br />development costs. The developer has indicated the receipt of City financial assistance is necessary for the project to <br />proceed and meet debt coverage and value assumptions. The developer’s request for assistance ($2.088 million) is <br />equal to approximately 8.67% of total project costs. See complete sources and uses (current information as <br />presented to Springsted by the developer) below from the application: <br /> <br />Springsted Incorporated <br />380 Jackson Street, Suite 300 <br />Saint Paul, MN 55101-2887 <br />Tel: 651-223-3000 <br />Fax: 651-223-3002 <br />www.springsted.com