07-25-2016 EDA Packet - Laserfiche WebLink

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