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City of Elk River, Minnesota <br />Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and <br />Elk River Lodge and Residential Suites, LLC <br />January 25, 2018 <br />Page 2 <br />information provides that the request for assistance would be pay -as -you -financing as reimbursement for <br />extraordinary development costs. The developer has indicated the receipt of City financial assistance is necessary for <br />the project to proceed to finance a portion of the project costs. The developer has requested 90% of the available tax <br />increment for a 25 year term. Based on current projections, this would equate to approximately $1.2 million with an <br />estimated present value of $677,000. See complete sources and uses below from the developer's supporting <br />financial materials submitted to Springsted. <br />Sources <br />Amount <br />Uses <br />Amount <br />Equity <br />$1,179,804 <br />Land Acquisition <br />400,000 <br />Debt <br />$4,719,804 <br />Site Work <br />834,071 <br />TIF <br />Construction <br />4,316,772 <br />Architectural & Engineering <br />75,825 <br />Le al Fees <br />10,000 <br />Interest during Construction <br />82,350 <br />Contingencies <br />180,000 <br />Total <br />$5,899,018 <br />Total <br />$5,899,018 <br />There was some discussion during the first application process at a previous EDA Finance Committee regarding the <br />size of the proposed district (one or two properties) and related acquisition price. The acquisition price included in <br />the project sources and uses is for the 1.76 acre parcel that will comprise the 40 -unit housing project. Reducing the <br />existing purchase price from $5.21/square foot to something less is expected to have a positive impact on the <br />performance of the project. It could ultimately reduce the amount of assistance necessary but is not expected to <br />eliminate the need for assistance. <br />Tax Increment Assumptions (Jackson Hills) <br />In order to estimate the amount of TIF revenues generated by the proposed project, certain assumptions were made <br />based on the value of the project, construction schedule, and anticipated financing terms. <br />Total project area (2 parcels) <br />0 75-134-2303 (EMV of $71,900) <br />0 75-134-2305 (EMV of $233,700) <br />o Base value of TIF District <br />o Estimated original net tax capacity of $3,820 <br />■ Classified as residential rental class rate <br />Estimated total market value upon completion <br />0 40 units at $82,750/unit <br />o Total estimated completed value: $3,310,000 <br />o Based on Assessor review <br />