7.3 SR 05-15-2023 - Laserfiche WebLink

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Project Financing There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay- as-you-go basis. With upfront financing, the City would finance a portion of the applicant's initial project costs through the issuance of bonds or as an internal loan. Future revenues would be collected by the City and used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the applicant would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay -as -you -go -financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the applicant. If revenues are less than originally projected, the applicant receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service payments and would have to use other sources to fill any shortfall of revenues. With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if revenues are not sufficient. The project financing would be pay-as-you-go for reimbursement of certain costs. The developer would finance all costs upfront through a combination of bank financing and equity (cash and land) and would receive annual remittance of the tax abatement as a rebate for total taxes paid from both the City and County, through separate agreements and terms of assistance. Tax Abatement Revenue Assumptions The County Assessor provided a preliminary taxable value estimate for the project. To estimate the amount of available tax abatement 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 o Parcel ID: 75-128-4206 (previous) o Parcel ID: 75-930-0105 (new) o Base value as of Jan. 1, 2022 ■ Existing land value of $137,200 ■ Original net tax capacity (ONTC) of $1,994 o Assuming classification as commercial -industrial (C-1) ■ C-1 classification rate is 1.5% first $150,000 value and 2% value above $150,000 • Estimated total market value upon completion 0 25,000 square foot facility ■ $57 per square foot (approximate) ■ $1,428,000 • Total taxable value of the project is $1,566,000 • Incremental value generating tax abatement based on difference between existing land and new land/building value • Construction commences and is completed in 2023 0 Project values 100% complete for assess 2024 and taxes payable 2025 • First abatement collection in 2025 • Final year collection in 2034 (up to 10 years) • Maximum term of abatement 0 15 years if all three taxing entities participate or 0 20 years if one taxing entity declines participation or 90 days pass from initial participation request ■ With written denial of participation from the School District • 0% annual market value inflator Tax Abatement Revenue Estimates Tax Abatement Revenue Projections Annual Market Value Inflator 0% City Share Total Estimated Annual Revenue Full Buildout $12,564