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11-28-2022 EDA
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11-28-2022 EDA
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11/29/2022 8:54:58 AM
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MV EDA
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11/28/2022
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<br /> <br />6. Management Fee – The proposed management fee is 5% of the effective gross income of the <br />project. This is within the typical range of 3% to 5%. <br /> <br />7. Reserves – The annual deposit to replacement reserves is set at $250 per unit per year. <br />Typical deposits to the replacement reserve range between $250 - $450. <br /> <br />8. Low-income Housing Tax Credits (LIHTC) – The developer anticipates tax credit pricing of <br />$0.88 for every $1.00 of available tax credits, which generates approximately $18.68 million <br />of proceeds for the project. Tax credit pricing on many current projects is between $0.85 and <br />$0.95. Based on current conditions, the assumed tax credit equity is reasonable. <br /> <br />9. TIF Note – The requested $2,400,000 of TIF assistance is more than what is necessary for <br />the project to become “financially feasible”. We’ve concluded the project could achieve <br />feasibility with TIF assistance up to $1,817,000 over an anticipated term of 20-years. This <br />represents approximately 3.9% of the total project costs, which is reasonable for a project of <br />this nature. <br /> <br />Project Status <br /> <br />The project sources outlined by the developer include Low Income Housing Tax Credits and a <br />$2,500,000 grant from Ramsey County ARPA. As of the date of this memorandum, neither funding <br />source has been granted or allocated. If the amount of the sources is different from the proforma <br />that Ehlers reviewed, the level of TIF assistance recommended herein could change. <br /> <br />Recommendation: <br /> <br />Based on our review of the Developer’s current pro forma and under current market conditions, the <br />project may not reasonably be expected to occur solely through private investment within the near <br />future. The cost associated with development of this project is only feasible, in part, through public <br />financial assistance from the EDA. We conclude approving the preliminary development agreement <br />which includes and outlines financial support in an amount not to exceed $1,817,000 is warranted <br />for this project. <br /> <br />Please contact Jason Aarsvold or Schane Rudlang at 651-697-8500 with any questions.
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