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o Original net tax capacity (ONTC) of $6,812 <br />o Assuming classification as commercial-industrial (C-I) <br /> C-I classification rate is 1.5% first $150,000 value and 2% value above $150,000 <br />• Estimated total market value upon completion <br />o 20,000 square foot warehouse facility <br /> $67 per square foot (approximate) <br /> $1,349,100 <br />• Incremental value based on difference between existing and new land/building value <br />• Construction commences in 2020 and is completed in 2021 <br />o Project values 100% complete for assess 2022 and taxes payable 2023 <br />• First increment collected in 2022 <br />• Net present value (discount) rate of 4% <br />• 3% annual market value inflation <br /> <br />Tax Increment Revenue Estimates <br /> <br /> Revenue Estimates <br /> <br />Estimated annual available increment (first year) $22,739 <br /> <br />Total gross tax increment $268,083 <br />City retainage (10%) $26,809 <br />Net amount available for development (90%) $241,274 <br /> <br />Total estimated present value (4%) $192,196 <br /> <br />Estimated Applicant Principal TIF Note $190,000 <br />Estimated interest payments at 4% $41,880 <br />Total payments $239,556 <br /> <br />Estimated surplus ($241,274 - $239,556) $1,718 <br /> <br />The level of tax increment revenues projected for this project are less than what the applicant has requested. <br />As a result, the applicant will be required to obtain additional funding from other sources, presumably equity <br />and/or equity, low-interest loans or forgivable loans/grants to fill the remaining gap. <br /> <br />Applicant Pro forma Analysis including But-For <br />Upon approval of a TIF district and project, the City must make several findings, including the “but for” test: that <br />the proposed development would not reasonably be expected to occur solely through private investment within <br />the reasonably foreseeable future. The applicant has stated that but for the provision of tax increment <br />financing, the project as proposed would not occur. In the application for financial assistance and supporting <br />materials, including the but-for statement, the applicant provided sources and uses of funds illustrating an <br />approximate $400,000 gap due to increased costs of the project relating to acquisition, site development and <br />stormwater ponding, and winter construction. The applicant provided a letter from its lender indicating the <br />estimated amount of financing available is 50% of total project costs. Based on total original cost estimates of <br />$2.5 million, this would equate to approximately $1.259 million of potential lending. Remaining funding sources <br />include SBA loan and equity. Ability to obtain an increased level of funding through one or more of the other <br />funding sources would be subject to financial feasibility and availability of annual revenues to support <br />repayment, as well as willingness of the lender to provide additional funding. <br /> <br />Based on the applicant’s stated position relative to the need for tax increment financing assistance, the City <br />could make its “but for” finding and provide tax increment assistance. We recommend, however, that the City <br />review the provided assumptions to consider if the project meets the but-for test and, if so, what an appropriate <br />level and type of TIF assistance may be based on the information submitted by the applicant. Following <br />thorough evaluation of the project as provided allows the City to be prepared to make an informed “but-for” <br />decision based on the likelihood of the project needing assistance, as well as the appropriate level of <br />assistance. As stated previously, the applicant’s request for financial assistance of $400,000 is more than the