11-30-2021 JOINT FINANCE COMMITTEE PACKET

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With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment revenues are not sufficient. The project financing as requested includes pay-as-you- go for reimbursement of eligible costs. Tax Increment Revenue Assumptions To estimate the amount of available TIF revenues generated by the proposed project, certain assumptions were made based on the value of the project, construction schedule, and anticipated financing terms. • Total existing value of $233,700 o Parcel ID: 755-134-2305 o Base value as of Jan. 1, 2021 o Original net tax capacity (ONTC) of $2,921 o Assuming classification as residential rental  Rental classification is 1.25% • Estimated total market value upon completion o $6,300,000 o 44 new units at $143,182/unit • Classification for all units as rental o Rental class rate (1.25% per unit) • Incremental value based on difference between existing and new land/building value • Construction commences in 2022 and is completed in 2023 o Project values 60% complete for assess 2023 and taxes payable 2024 o Project values 100% complete for assess 2024 and taxes payable 2025 • First increment collected in 2024 o Election to delay first increment by up to 4 years • Net present value (discount) rate of 4% • 0% annual market value inflation Table 2: Tax Increment Revenue Estimates Scenario 1 Existing ‘Base’ Value $233,700 Estimated Total Taxable Value $6,300,000 Estimated Annual Increment (full buildout 2025) $94,018 Estimated Total Gross Increment $1,371,214 Estimated City Retainage (10%) $137,124 Estimated Total Net Increment (90%) $1,234,090 Estimated Developer Principal TIF Note (Maximum) $850,000 Estimated Developer TIF Note Interest at 4% $356,708 Estimated Total Payments on TIF Note $1,206,708 Estimated Number of Years 15 years Estimated Surplus Revenues ($1,234,090 - $1,206,708) $27,382 Financial Needs (Pro forma Analysis) including But-For Upon approval of a TIF district and project, the City must make several findings, including the “but for” test: that the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The applicant has stated that but for the provision of tax increment financing, the project as proposed would not occur. Based on the applicant’s stated position relative to the need for tax increment financing assistance, the City could make its “but for” finding and provide tax increment assistance. We recommend, however, that the City review the provided assumptions to consider if the project