2009.05.18 EDA Packet - Laserfiche WebLink

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City of Hugo, Minnesota May 14, 2009 Page 3 o Commences spring/summer 2009 o Complete by early 2010 ■ 75%for Assess January 2, 2010, Taxes Payable 2011 ■ 100%for Assess January 2, 2011,Taxes Payable 2012 ■ 1.25%annual compounded market value inflator o Land and building value ■ 10% retained for City admin(TIF) ■ 2009 tax rates o Remain constant through term of district ■ Fiscal disparities contribution from outside district A summary of the estimated tax increment over the full term of the district is shown below: Total Gross Tax Increment 665,263 City Administrative Retainage 10% 66,527 Net Amount Remaining 90% 598,736 TIF Revenue Note Principal 15 Years 148,800 TIF Revenue Note Interest 15 Years 134,311 TIF Revenue Note Capitalized Interest 22,564 Total Est. Payments to Developer 305,676 Remaining tax increment 292,842 The annual amount of estimated gross tax increment based upon a final market value of$2.01VI and a base market value of$758,700 is approximately$18,486 for the first full year in taxes payable 2012. With a 1,25%compounded annual market value inflator,that amount is estimated to increase to$29,063 in 2036(estimated final year). In the case of a TIF Revenue Note,the assumption of an annual compounded market value inflator is a risk factor for the developer and not the City. The City anticipates retaining 10%of the tax increment for documented administrative expenses,with the remaining 90%pledged for payment to the developer over a specific term. Based on the But-for analysis outlined previously the recommended maximum reimbursement amount to the developer is$148,800, plus interest costs with an 8% rate,over a maximum 15-year period(through 2026). With an estimated post development assessed value of approximately$2,000,000 and assuming a 1.25%annual market value inflator the proposed TIF District No. 1-2 is capable of supporting a TIF Revenue Note of$148,800, plus interest and capitalized interest costs of$134,311 and$22,564, respectively. The total estimated amount of assistance is$305,676 over 15 years.