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City of Elk River,Minnesota
<br /> Envision Co.,LLC(Sportech)request for Tax Abatement
<br /> June 23,2015
<br /> Page 4
<br /> Land Acquisition $1,288,590 Bank Loan $6,468,474
<br /> Site Development $667,215 Equity $1,939,266
<br /> Construction $5,640,525 Tax Abatement $1,288,590
<br /> Machinery&Equipment $2,100,000
<br /> Total Costs $9,696,330 Total Sources $9,696,330
<br /> Project Financing
<br /> There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as-
<br /> you-go basis. With upfront financing,the City would finance a portion of the Developer's initial project costs through
<br /> the issuance of bonds or as an internal loan. Future revenues would be collected by the City and used to pay debt
<br /> service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the Developer would finance
<br /> all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available.
<br /> Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for
<br /> repayment to the Developer. If revenues are less than originally projected,the Developer receives less and therefore
<br /> bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go
<br /> financing may not be financially feasible. With bonds, the City would still need to make debt service payments and
<br /> would have to use other sources to fill any shortfall of revenues. With internal financing,the City reimburses the loan
<br /> with future revenue collections and may risk not repaying itself in full if revenues are not sufficient. The form of
<br /> financial assistance proposed in this case would be considered upfront internal financing in which the City would
<br /> defer receiving upfront payment for the land in the amount of $1,288,590. The City would collect the annual
<br /> abatement revenues from the proposed project(City and County share, if participation is approved)to reimburse the
<br /> Development fund for the land cost of $1,288,590. An interest component has not been included and is simply
<br /> payment in full for the price of the land.
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<br /> Total Estimated Tax Abatement Revenues
<br /> Estimated Cit Share $699,924 $945,605 $699,924 $945,605
<br /> Estimated Count Share $608,587 $770,955
<br /> Estimated Total Combined Revenues $699 924 $945,605 $1,308 512 $1716,560
<br /> Total Land Cost $1,288,590 $1,288,590 $1,288,590 $1,288,590
<br /> Estimated Sur.Ius 1 Deficit 1111=1M $342,985 $19,922 $427,970
<br /> The table above shows what the impact of participants (City and County) and number of years may have on the
<br /> ability of the City to receive full payment for the land price of$1,288,590. Scenario 3 which includes City participation
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