PL PACKET 02161993 - Laserfiche WebLink

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The building-would be home to our dental practice and to other dental specialists. Personally, I have • been practicing for 30 years and our clinic is currently located at 2958 Johnson St. N.E., Minneapolis, MN. The dental specialists are those that I currently work with and they will provide quality service and compliment our operations. We would like to begin construction early in 1993, and take occupancy in the summer of 1993. Request for Tax Increment Assistance A. Tvne of District - We are requesting that the City establish a Redevelopment District. It is our opinion that when the properties are combined, they will qualify under Section 469.174 Subd. 10.1 in that the substandard building occupies over 15% of the area. In that regard, please find attached a letter and a property survey summary dated 12-1-92 prepared by the Runyan/Vogel Group, Inc. In short, the Runyan/Vogel Group has documented extensive building and fire code deficiencies that would be cost prohibitive to correct. B. Amount Requested - We are requesting that the City provide $125,000 of assistance to the project. This assistance will be in form of a land write down. The total purchase of Lot 1 is $125,000. It is our consultant's estimate (see attached cash flows dated 12-3-92, 4 pages of 4 and 1 page of 1) that we can achieve $125,000 in approximately 10 years of tax increment. C. Method of Projects for Tax Increment - We are requesting that the City use the "Pay-as-you-go method for tax increment, to be paid over ten years. A sample form is shown on page 4 of our • consultant's cash flow. D. But-for analysis - In order to justify the request for tax increment financing and complete the but-for analysis, we have prepared a pro forma. This model compares the project with a similar market rate rental to determine whether or not the investment of equity is valid under current market conditions. You will note that under the column entitled "Without Tax Increment Assistance" the return on equity is approximately $17,000 or 5.3%. This amount is obviously too low of a return on an investment, given current market conditions. The second column entitled "With Tax Increment Assistance" allows a return of approximately 9.22% which is closer to the needed return to attract investment-quality equity. E. LGA Method We are proposing that the City use a portion of its allowed 10% administrative fee to cover the LGA loss. Page 3 of our consultant's cash flow demonstrates how this process might work.. F. TIF Assistance - Page 1 of the consultant's cash flow provides the assumptions we used in our analysis. Enclosed, please find the requested escrow deposit of$2,500.00. My understanding is that the escrow is used for the City's costs of legal and fiscal help; expenses not incurred should be refunded.