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 5 In order for the proposed project to qualify as a tax increment financing housing district, the property must satisfy the income requirements for a qualified residential rental project as defined in section 142(4) of the Internal Revenue Code, The requirements of this subdivision apply for the duration of the tax increment financing district. The income requirements are as follows; ➢ at least 20% of units are occupied by individuals whose income is 50% or less of area median income, or ➢ at least 40% of units are occupied by individuals whose income is 60% or less of area median income. In addition, not more than 20 percent of the square footage of the buildings that receive assistance from tax increments may consist of commercial, retail, or other nonresidential uses, Project Costs The Developer's submittal includes a preliminary total project budget of $10,074,657 as illustrated in the table below, taca� ;dos met ) Ttat Land Acquisition $1,200,000 Construction Costs 6,479,000 Soft costs 275,000 Finance Costs 390,000 Marketing 285,000 Development Fee /Overhead 593,240 Contingency (4 %) 368,000 Reserves 209,760 Working Capital 274,657 Total Project Costs $10,074,657 The Developer has indicated they currently own one of the two parcels on which the development is proposed, and has indicated the second parcel is currently under contract, assuming the project is able to proceed. A portion of the land acquisition cost estimate will be used to repay delinquent real estate taxes on the parcel the Developer has under contract at the time of closing. The two parcels combine for an approximate area of 8.52 acres. The per acre purchase price equates to approximately $140,845 including the repayment of delinquent taxes, and approximately $120,305 net of the tax payment. It should be noted that one of the parcels on which a majority of the rental units will be located is already improved with site grading, utilities, and roadways installed. The Developer has estimated the total for the remaining hard costs and vertical improvements to be $6,479,000, which equates to a per -unit construction cost of approximately $77,131. The Developer has indicated the construction cost budget is based on meeting Davis -Bacon wage requirements pursuant to compliance requirements of the tax credit program. Blended within this construction cost line -item are costs associated with the development