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Project Financing <br />There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay- <br />as-you-go basis. With upfront financing, the City would finance a portion of the applicant’s initial project costs <br />through the issuance of bonds or as an internal loan. Future revenues would be collected by the City and used <br />to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the applicant <br />would finance all project costs upfront and would be reimbursed over time for a portion of those costs as <br />revenues are available. <br /> <br />Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the <br />risk for repayment to the applicant. If revenues are less than originally projected, the applicant receives less <br />and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases <br />pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt <br />service payments and would have to use other sources to fill any shortfall of revenues. With internal financing, <br />the City reimburses the loan with future revenue collections and may risk not repaying itself in full if revenues <br />are not sufficient. The project financing would be pay-as-you-go for reimbursement of certain costs. The <br />developer would finance all costs upfront through a combination of bank financing and equity (cash and land) <br />and would receive annual remittance of the tax abatement as a rebate for total taxes paid from both the City <br />and County, through separate agreements and terms of assistance. <br /> <br />Tax Abatement Revenue Assumptions <br />The County Assessor provided a preliminary taxable value estimate for the project. To estimate the amount of <br />available tax abatement revenues generated by the proposed project, certain assumptions were made based <br />on the value of the project, construction schedule, and anticipated financing terms. <br /> <br />• Total existing value <br />o Parcel ID: 75-128-4206 (previous) <br />o Parcel ID: 75-930-0105 (new) <br />o Base value as of Jan. 1, 2022 <br /> Existing land value of $137,200 <br /> Original net tax capacity (ONTC) of $1,994 <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 25,000 square foot facility <br /> $57 per square foot (approximate) <br /> $1,428,000 <br />• Total taxable value of the project is $1,566,000 <br />• Incremental value generating tax abatement based on difference between existing land and new <br />land/building value <br />• Construction commences and is completed in 2023 <br />o Project values 100% complete for assess 2024 and taxes payable 2025 <br />• First abatement collection in 2025 <br />• Final year collection in 2034 (up to 10 years) <br />• Maximum term of abatement <br />o 15 years if all three taxing entities participate or <br />o 20 years if one taxing entity declines participation or 90 days pass from initial participation <br />request <br /> With written denial of participation from the School District <br />• 0% annual market value inflator <br /> <br />Tax Abatement Revenue Estimates <br /> <br />Tax Abatement Revenue Projections <br /> <br />Annual Market Value Inflator 0% <br /> <br />City Share Total Estimated Annual Revenue Full Buildout $12,564