7.1 HRSR 03-03-2014 - Laserfiche WebLink

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City of Elk River, Minnesota Preliminary Financial Analysis of Blackhawk Woods TIF Application 10/03/2013 Page 4 Tax Increment Revenue Estimates The tax increment revenue estimates are based on collection of revenues for the full term of the district. Based on the assumptions outlined above, the projected tax increment revenues to be generated from the project are shown in the chart on the following page. The Developer has requested TIF financing on a pay -as- you -go basis, to help offset the reduced rent limitations required by the Section 42 program. The Developer has requested the assistance over the full term of the District (up to 25 years) based on the initial revenue projections. The revenue projections as prepared by Springsted and illustrated in the table above are slightly different and show an increased present value, or principal amount, of $1,079,005 as opposed to the original estimated amount of $996,871 with a term of approximately 23 years instead of 25 years. Further discussion regarding the actual term and amount is recommended. Project Qualification Initial discussions with the developer indicate that the project as proposed will qualify as a housing TIF District. A housing TIF District is a type of tax increment district which consists of a project that is intended for occupancy by persons or families of low and moderate income. Revenue derived from tax increment from a housing district must be used solely to finance the cost of a housing project as defined. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the City may be included in the cost of a housing project. Scenario 1 Annual Market Value Inflator 0% Total Gross Tax Increment $2,323,089 City Retainage (10 %) $232,319 Net Amount Available for Developer (90 %) $2,090,770 Present Value at 4.70% of Developer Amount (full 26 year term of district) $1,079,005 Projected Amounts based on Developer's Revenue Estimates PayGO Principal Amount $996,871 PayGO Interest (4,70 %) Amount $769,398 Total Payments $1,766,269 Estimated Term of Assistance 23 Years Estimated Surplus Increment $324,501 The Developer has requested TIF financing on a pay -as- you -go basis, to help offset the reduced rent limitations required by the Section 42 program. The Developer has requested the assistance over the full term of the District (up to 25 years) based on the initial revenue projections. The revenue projections as prepared by Springsted and illustrated in the table above are slightly different and show an increased present value, or principal amount, of $1,079,005 as opposed to the original estimated amount of $996,871 with a term of approximately 23 years instead of 25 years. Further discussion regarding the actual term and amount is recommended. Project Qualification Initial discussions with the developer indicate that the project as proposed will qualify as a housing TIF District. A housing TIF District is a type of tax increment district which consists of a project that is intended for occupancy by persons or families of low and moderate income. Revenue derived from tax increment from a housing district must be used solely to finance the cost of a housing project as defined. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the City may be included in the cost of a housing project.