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Ms. Huot presented her financial analysis. The developer’s application includes an <br />approximate $16.9 million project that would be funded by an estimated $11.9 million of tax <br />credits, $3.29 million of debt financing, rebates, deferred developer fee and TIF mortgage. <br />The developer has asked for annual tax increment revenues generated by the new project to <br />finance a gap of approximately $780,000. <br /> <br />Ms. Huot noted that through the submission of the tax increment financing application and <br />supporting financial information, the developer has indicated that the project would not <br />occur as proposed without financial assistance from the city due to the reduced rents for all <br />55 housing units. Using the developer’s assumptions, Ms. Huot stated that with assistance, <br />the project would be able to obtain sufficient financing to support total project costs. She <br />further indicated that using the same assumptions, without assistance, the project is expected <br />to have a financial gap of $780,000. The developer has stated that applying the city’s tax <br />increment revenues to the project would provide the funding levels necessary to close that <br />gap. <br /> <br />Ms. Huot explained that the projected rental rates are based on approximate 50% AMI <br />affordability levels for 100% of the units. The TIF statute requires at least 20% of the units <br />at 50% AMI or 40% of the units at 60% AMI, putting this project at a higher level of <br />affordability than what is statutorily required for the tax increment financing tool. LIHTC <br />project requirements include 100% of the units at 60% AMI and this project proposal also <br />exceeds those affordability requirements. <br /> <br />Hardin questioned whether the developer could increase the annual rental rates up to 60% <br />AMI and, if so, whether or not there would be a need for TIF. <br /> <br />Ms. Huot stated that an increase in annual rental rates up to 60% AMI is projected to have a <br />similar impact of providing additional cash flow as would annual tax increment revenues and <br />would eliminate the need for assistance. Actual performance would be subject to market and <br />developer’s ability to receive the required funding sources and levels. <br /> <br />Ms. Huot reviewed the maximum term of assistance pursuant to the city’s policy is 15 years <br />and based on current revenues, the actual term of assistance is projected to be closer to 10 <br />years. The term of the bonds for the project is based on 40 years and LIHTC requirements <br />for affordability would be 30 years. The term of the tax increment financing would be for a <br />much shorter period than projected debt payments, which may lead to cash flow <br />considerations subject to restructuring. Consistent with development projects, including <br />affordable housing LIHTC projects, a developer fee has been included in the project costs. <br />The developer is deferring just over 50% of those costs to provide additional upfront <br />funding. <br /> <br />At the request of the committee, Ms. Othoudt presented the developers site plan, renderings <br />to the group. <br /> <br />Motion by Hardin to recommend approval of TIF funding in the amount of $780,00 <br />for the maximum term of 15 years contingent of the creation of the TIF district and <br />securing state tax credits to the HRA and seconded by Magnussen. Motion carried 7- <br />0.