4.1. EDSR 04-25-2017 - Laserfiche WebLink

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City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 2 extraordinary development costs. The developer has indicated the receipt of City financial assistance is necessary for the project to proceed to finance a portion of the project costs. The developer's initial request for assistance ($500,000)is equal to approximately 8.3% of total project costs. Under the current application and rating criteria, the project may be eligible to receive up to 65% of the requested amount, which would be equal to $325,000. The projections provided in the analysis are based on the current application guidelines. See complete sources and uses below from the developer's supporting financial materials submitted to Springsted. These figures are slightly different from the original application with some adjustments made to the debt and equity amounts, as well as the revised TIF amount. Sources Amount Uses Amount Equity $1,018,197 Land Acquisition 400,000 Debt $4,656,803 Site Work 300,000 TIF $325,000 Construction 4,855,000 Architectural &Engineering 75,000 Legal Fees 10,000 Interest during Construction 130,000 Contingencies 230,000 Total $6,000,000 Total $6,000,000 There was some discussion at the last EDA Finance Committee regarding the size of the proposed district (one or two properties)and related acquisition price. The acquisition price included in the project sources and uses is for the 1.76 acre parcel that will comprise the 40-unit housing project. For clarification purposes, the applicant is in the process of revising the application and supporting materials to reflect this. Any future phases of development will be reviewed separately. Springsted provided some preliminary sensitivity analysis and adjusted the acquisition price to understand what impact a reduced purchase price may have on the overall feasibility of the project. Reducing the existing purchase price from $5.21/square foot to something less is expected to have a positive impact on the performance of the project. It could ultimately reduce the amount of assistance necessary but is not expected to eliminate the need for assistance. 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 previously outlined, the projected tax increment revenues to be generated from the project are shown in the chart below. Actual revenues generated by the project will be based on realized assumptions.