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EHLERS a ASSOCIATES INC To: City of St. Anthony Village From: Mark Ruff Jim Prosser Subject: Redevelopment Issues Date: July 2, 2001 Attached is a suggested schedule for the Northwest quadrant redevelopment. Develop- ment management services would be provided by Ehlers&Associates, however several other firms and groups play a key role in the redevelopment process. It is important to note that there are a number of critical City Council decision points during this process. These points have been identified in the schedule matrix. A second key issue is that it is likely that the redevelopment will be phased over time.The actual phasing components are best determined after proposals are received and evalu- ated. It is recommended that the City permit developers to submit proposals for all or part of the redevelopment area. This will increase project coordination challenges but may increase the number of development proposals to consider. ■ An obvious concern is the impact of the new tax law on redevelopment financing. Exact ■ estimates will not be possible until new tax rates are available from the County and State later in 2001. Tax rates depend on the revised net tax capacity for the city based on the ■ new class rates. In addition tax rates may be increased,even without new city spending, because of loss of state aids. Generally speaking,the impact on rental property develop- ment is likely to be neutral. Any decrease in property taxes will increase net income from the development assuming the property price points remain the same. Given the current housing shortage that is a reasonable assumption. TIF projections from commercial will be reduced due to the approximately 40% decrease in class rates. The funding gap between the cost to acquire property for redevelopment and public im- provements and the revenue from land sales for development and tax increment has ■ widened because of the new tax bill. The amount of outside assistance from state and Metropolitan grants will need to increased. The estimated land assembly cost for the Apache Mall area (including acquisition, reloca- tion, demolition and cleanup) is $30 million. This excludes the existing Equinox apart- ments, the Cub Food store and the LG Anderson medical building. Public improvements are estimated at $3 million. A preliminary financial analysis of the alternate options is provided in the table below. For comparative purposes the analysis shows current law and estimated impacts based on the new tax law. The exact impact of the new tax bill cannot be determined until the state ■ and county provide additional data regarding net tax capacity and tax rate changes. Northwest Quadrant -•- - Plan Anthony Village •I - I ■