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Springsted Incorporated <br /> 380 Jackson Street, Suite 300 <br /> $p Saint Paul,MN 55101-288Springsted <br /> Tel: 651-223-3000 <br /> Fax: 651-223-3002 <br /> www.springsted.com <br /> DRAFT MEMORANDUM <br /> TO: Members of the Housing and Redevelopment Authority of the City of Elk River <br /> Brian Beeman, Economic Development Director <br /> FROM: Mikaela Huot,Vice President <br /> Tom Denaway,Analyst <br /> DATE: October 3, 2013 <br /> SUBJECT: But-For Analysis for proposed Blackhawk Woods Senior Living Development <br /> The City of Elk River has asked Springsted to evaluate the tax increment financing (TIF) request submitted by Senior <br /> 30 Elk River Limited Partnership (the developer) for the proposed development of a senior housing rental project <br /> consisting of approximately 84 one-level townhome units. We have reviewed the project assumptions and general <br /> rationale for TIF assistance submitted by the developer. It is our understanding that the developer is in the process <br /> of assembling financing for the project, including tax credits and permanent financing from HUD and is currently <br /> working on finalizing those commitments necessary to proceed with the project. It has been indicated that project <br /> funding would be at least partially contingent on City tax increment financing assistance and that a TIF Note is <br /> necessary to provide sufficient cash flow to meet the annual debt service coverage requirements in the operating <br /> proforma. <br /> Based on this information, the City could be justified in making a "but for" finding that the anticipated development <br /> would not reasonably be expected to occur solely through private investment within the reasonably foreseeable <br /> future. We recommend, however, that the City also consider an appropriate level of TIF assistance for <br /> reimbursement of certain eligible project costs based on the developer's information. The purpose of this memo is to <br /> outline our analysis of the project including review of the developer's request for assistance, tax increment revenue <br /> projections, review of the developer's project proforma and projected rates of return as provided by the developer. <br /> Background <br /> The application for Tax Increment Financing proposes the development of a senior living townhome community. The <br /> Developer is proposing to construct an 84-unit townhome development, containing 49 one-bedroom units, 35 two- <br /> bedroom units, and a clubhouse activity center. Additionally, each unit will include an attached garage. The <br /> Public Sector Advisors <br />