02-26-1998 - Laserfiche WebLink

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district) be allocated to the senior housing component of the Project. The term of the TIF we are requesting is thirteen (13) years with respect to all components of the project (which we understand is the term of the underlying TIF district.) Simply put, the purpose of the tax increment financing is to provide reimbursement for a portion of the development costs of each of the projects so as to make the projects financially viable. Without the TIF assistance, the amount of profit anticipated to be generated by the operation of the Projects is not adequate to compensate the owner for the required equity investment. We believe the Silverview Estates Project is consistent with the general policy for tax increment financing because it is providing quality real estate development consistent with the existing land use proposals for this area which would not otherwise be achievable. As stated in Mounds View tax increment policy: "The Mounds View Economic Development Authority understands and abides by the fundamental principal which makes tax increment financing viable to encourage development and redevelopment which would not otherwise occur." We believe that the Projections and the related economic analysis provided with this application clearly demonstrate that the Project could not be constructed and operated without tax increment financing assistance in the amounts proposed. We believe that the senior housing and office development is consistent with land use goals and will contribute to the immediate Project area and the entire City of Mounds View. 2. Statement of necessity for use of tax increment financing for project. • The acquisition, development and construction of the Silverview Project cannot be completed without the benefit of TIF financing. The financial forecasts and Prospectus which are a part of this application set forth in detail the applicant's assumptions concerning operating revenues, operating expenses and construction costs. Taken together, we believe these projections clearly indicate that neither the Project as a whole nor any component thereof is financially viable without the benefit of TIF financing which we are requesting. For example, assuming the maximum possible mortgage on the 5,000 square foot office project, the project will still require approximately a one hundred forty- eight thousand dollar ($148,000.00) equity investment based upon our present cost analysis. With the benefit of 90% of the TIF from the office project only, the project will produce a very small i.e., $9,000 annual profit during the first five (5) years. This is obviously not an inadequate return on the one million dollar equity investment (i.e., average 2%). The case for TIF is even more compelling in light of the risk inherent in the construction, financing, and lease-up of these properties. 3. Describe the Potential for Growth. The projections have assumed that operating expenses and operating income grow at the rate of 5% and 3% respectively.