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<br />N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\Joint Finance Committee Agenda Packets\2020\09-29-2020\4.1 sr <br />Riverwalk Apartments TIF Application.docx <br />4. Demonstrates the ability to encourage unsubsidized private development through “spin off” <br />development. <br /> It is unknown whether this project will encourage unsubsidized private development <br />through “spin off” development <br />5. Facilitates the development process and achieves development on sites that would not develop “but <br />for” the use of TIF. <br /> The former Saxon site has been vacant for over 10 years. Several developments have been <br />proposed on the site, but none of the projects ever came to fruition. <br /> Using the developer’s assumptions, Baker Tilly’s analysis suggests without financial <br />assistance, this project does not appear to be feasible. <br />6. Removes blight and/or encourages redevelopment of commercial and industrial areas resulting in <br />high quality redevelopment and private reinvestment. <br /> The proposed project is projected to enhance the city’s economic base as it removes and <br />redevelops a blighted property on a high-profile site. <br />7. Offsets redevelopment costs (i.e. contaminated site cleanup) over and above the costs normally <br />incurred in development. <br /> It is unknown at this point whether the site has any soil contamination. <br /> Approximately $5.55M has been identified as site development costs in the application. <br />Further breakdown of the $5.55M is still being determined. <br />8. Aids the implementation of the Mississippi Connections Plan. <br /> This project is outside of the study area for the Mississippi Connections Plan and does not aid in <br />the implementation of the Plan. <br /> <br />The proposed project meets public purpose objective #1, #2, #5, #6, and potentially #7. <br /> <br />Policy Considerations <br />1. Each Project is required to meet the but for test to determine the need for and level of assistance. <br /> Using the developer’s assumptions, Baker Tilly’s analysis suggests that without financial <br />assistance, the project does not appear to be feasible. The developer’s operating proforma <br />without tax increment assistance is less than 1.0x DCR and with assistance would be closer <br />to 1.13-1.21x DCR, which is generally an acceptable level required for this type of project. <br /> <br /> Baker Tilly’s analysis revealed other possible methods that could be used to increase financial <br />feasibility and reduce the level of public participation that may be needed for the project. <br />Adjusting the assumptions related to land costs, equity contributions and annual revenues <br />(lease rates) all have positive impacts to the project; thus, resulting in a reduction in the <br />potential level of assistance that is needed and focusing on the extraordinary redevelopment <br />costs of the site. <br /> <br />2. Developers receiving TIF assistance shall provide a minimum of ten percent cash equity investment <br />in the project. TIF is not to be used to supplement cash equity. <br /> The developer indicated Owner Cash Equity in the Riverwalk Redevelopment project of <br />$6,311,255.00 equivalent to 20% percent equity in the project, which is higher than our <br />minimum requirement for equity investment. <br />3. TIF will not be used in circumstances where land and property price is in excess of fair market <br />value. <br /> The developer’s application identified acquisition costs of $2.464M. The applicant <br />determined this amount using the following calculation: 2.46m/178 units = 14k per door.