05-26-2020 JOINT FINANCE COMMITTEE PACKET

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The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperity Request for Action To Joint Finance Committee Item Number 4.1 Agenda Section General Business Meeting Date May 26, 2020 Prepared by Amanda Othoudt, EDD Item Description Hillside Heights Apartments Housing TIF Application and Financial Review Reviewed by Mikaela Huot, Financial Advisor Reviewed by Cal Portner, City Administrator Action Requested Review application and provide a recommendation to the Housing and Redevelopment Authority to establish Tax Increment Financing District No. 26. Background/Discussion Community Housing Development Corporation (CHDC) proposes to develop a three-story new construction affordable apartment building on the Southeast corner of Twin Lakes Road NW and 175th Ave NW. The building will consist of approximately 55 units with 13 one-bedroom units, 28 two-bedroom units, 14 three- bedroom units and approximately 60 parking spaces. Common amenities proposed include storage, a roof deck, fitness/physical therapy room, library, community room, patio area, ball court, playground, and community garden. Based on an estimated taxable value upon completion of $7,766,300, provided by the Sherburne County Assessor, the Hillside Heights Apartments Housing Project is estimated to generate approximately $3,152,604 in total gross tax increment over 26 years, the maximum term for a Housing TIF District. The net amount projected to be available for the project is 90% or $2,837,354, with the city retaining 10% for administrative and other eligible expenses over the 26-year term of the district. The developer requested $450,000 for land acquisition and $330,000 for site improvements for a total of $780,000. Per city policy, the total estimated gross increment available is $1,818,810 ($121,254 annually) over 15 years, the maximum term allowed. Following policy guidelines, the developer may be eligible to receive up to 90% of the gross tax increment over 15 years. The estimated total net (90%) amount of tax increment over the 15-year maximum period would be $1,636,935 ($109,129 annually). The estimated present value of the net tax increment is projected to be $1,125,475 assuming 4% interest and would exceed the developer’s request. Current estimates indicate it may take 10 years to meet the developer’s full requested amount assuming a 4% interest rate.