Laserfiche WebLink
City of Lino Lakes, Minnesota <br />Prelim Review of Lyngblomsten Request for TIF Assistance <br />April 1, 2019 <br />Page 5 <br /> <br /> <br />Project Financing <br />There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as- <br />you-go basis. With upfront financing, the City would finance a portion of the developer’s initial project costs through <br />the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and used to pay <br />debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the developer would <br />finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are <br />available. <br /> <br />Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for <br />repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less <br />and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay <br />as you go financing may not be financially feasible. With bonds, the City would still need to make debt service <br />payments and would have to use other sources to fill any shortfall of tax increment revenues. With internal financing, <br />the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment <br />revenues are not sufficient. The developer’s financial information includes pay-as-you-go financing. <br /> <br />Conclusion <br />Per the submitted application for assistance, the developer has requested approximately $5.3 million over 15 years <br />as related to development of the project site and construction of a senior care campus. Through the submission of <br />the tax increment financing application and supporting financial information, the developer has indicated that the <br />project as proposed would not occur on the current site without financial assistance from the City due to extraordinary <br />costs associated with acquisition of the additional properties and site development/infrastructure improvements. We <br />recommend additional review as the project proceeds relating to the following: <br />• Identification of extraordinary project costs for reimbursement <br />o Acquisition of redevelopment properties <br />o Installation of public improvements <br />• Estimated amount of assistance necessary for the project to proceed <br />o Number of years required <br /> City preference of maximum 6 years <br /> Developer request of 15 years <br /> <br />Thank you for the opportunity to be of assistance to the City of Lino Lakes. Please contact me at 651.223.3036 or <br />651.368.2533 or mhuot@springsted.com with any questions or comments. <br /> <br />Attachments: Project Qualifications: Definition of Housing Districts