05-06-2019 Council Packet - Laserfiche WebLink

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The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2018 Baker Tilly Virchow Krause, LLP Tax Increment Revenue Estimates Based on the assumptions outlined above and the estimated term of 10.5 years, the projected tax increment revenues that may be generated from the TIF District are shown in the chart below. Scenario 1 Total Number of Years 10.5 Total Estimated Taxable Value $22,991,000 Estimated Gross Annual Increment $326,740 Estimated Annual City Retained (5%) $16,337 Estimated Net Annual Increment (95%) $310,403 Total Gross Tax Increment $3,745,391 City Retainage (5%) $187,271 Net Amount to Development (95%) $3,558,120 The total value that generates the estimated tax increment revenues is from the taxable portion of the senior care building only. The remaining portion of the senior care building (skilled care) would be tax exempt. In addition, the townhomes would not be included within the boundaries of the TIF District. Therefore, the values would not generate any tax increment revenues and would be included in the taxing entities existing tax base once constructed and on the tax rolls. The construction schedule is assumed to be in conjunction with the senior care campus. In addition, redevelopment of the corner to include new commercial buildings would also enhance the tax bases and not be included in the district. Developer Pro forma But-For Analysis In approving a TIF district and project, the City must make several findings, including the “but for” test: that the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The developer has stated the assistance is necessary due to the high costs of developing/redeveloping the site, including acquisition of the 17-acre site, in addition to the properties on the corner to create a larger redevelopment opportunity. There are also significant public improvement and site development costs to allow access into the site. The project is unable to support the full $77.9 million of project costs upon completion without assistance. Based on the developer’s stated position relative to the need for tax increment financing assistance, the City could make its “but for” finding and provide tax increment assistance. We recommend, however, that the City also consider an appropriate level and type of TIF assistance for the project based on the information submitted by the developer. The application includes a requested 15-year term of assistance to equal approximately $5.3 million with costs in excess of $9 million identified as TIF- eligible, meaning reimbursable by tax increment revenues. The City’s position relative to the use of tax increment has typically been to finance extraordinary costs and the level of assistance is in part dictated by the ‘extraordinary’ costs of the project. Following thorough evaluation of the project as provided allows the City to be prepared to make an informed “but-for” decision based on the likelihood of the project needing assistance, as well as the appropriate level of assistance. The “but-for” test is used to determine whether a project is likely to proceed as proposed without the use of public dollars. To complete this analysis, we reviewed the developer’s provided operating proforma and constructed similar ten-year project proformas, showing a result if the developer receives the assistance as pay-as-you-go (reimbursement for TIF eligible costs) and showing a result if the developer does not receive