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Cityof Mounds View Staff Report 4111 April 3, 1997 Page 2 What is the impact to the tax base? • ► As outlined in MSP Real Estate's proposal under leasehold cooperative and real estate taxes,the project would generate approximately$13,000 in new taxes. This is a small increase for the value added to the project due to the financing strategies of homestead tax classification and the Holman taxed units. If the taxes are calculated without the Holman tax status and Leasehold Cooperative status the tax benefit would be approximately $84,000 in new taxes. Unfortunately, MSP Real Estate has stated that these two financing strategies are key to make the project successful and without them there is no development. One option may be to provide a larger City subsidy to the project to make up for the developers financial benefit for participating in the Holman Decree and Leasehold Cooperative Agreement. How would the addition of 28 units impact the storm sewer system? ► Public Works Director Mike Ulrich said that there is adequate capacity to handle 28 new units in this area with the existing 8 inch sewer main. Duane, EDA President and Roger K, Planning Commission Liaison, met with representatives from MSP this week to discuss the project. This meeting was beneficial to the developers in ensuring that questions regarding the project can be fully addressed at the work session. MSP will be providing a rendering of the rehab and new townhomes in hopes to provide a visual picture of what the project will look like. The tax increment request is for$230,000. The funds would come from existing Tax Increment generated from other projects in the City. MSP proposes to purchase the City EDA land for $35,000 and the balance of$195,000 would be distributed to MSP in the form of a low interest loan. Payments to the City from this loan can be put into a development fund and would not be subject to tax increment restrictions under the current law. Therefore, the funds could be used for other general fund activities which are currently not allowed with the use of TIF. If the Council has an interest in this project, the term and interest rate would need to be determined as we further evaluate the financial proforma for the project. In addition, the negotiation for the sale of the EDA owned land could proceed. The first request for action on this project would be for the City to approve a Resolution in support of the Holman Funding which is the 10 Minneapolis Public Housing units of which 3 can come from those Section 8 units that are already in Mounds View. This is needed in April to accompany MSP's application. The rehabilitation of Pleasant Wood Apts is a tremendous undertaking. To date the current owners will only be investing money for deferred maintenance and no extensive interior and exterior improvements are planned. This proposal would invest approximately$3 million into