7.6. HRSR 05-03-2021 - Laserfiche WebLink

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Request for Action Cir•ci Elk - River= To Item Number Housing and Redevelo ment Authority7.6 Agenda Section Meeting Date Prepared by General Business May 3, 2021 Colleen Eddy, Economic Development Specialist Item Description Reviewed by The Delta Apartments Housing TIF Cal Portner, City Administrator Application Reviewed by Action Requested Provide recommendation to the City Council regarding potential Tax Increment Financing District No. 27. Background/Discussion Stonewood Development,LLC. is proposing to construct two 90-unit residential apartment buildings on the former Saxon Auto site with underground parking. Phase 1 is expected to commence construction in 2021. The applicant intends Phase 2 shortly thereafter but has indicated construction could start 2-3 years after phase 1. They request assistance to include 90% of incremental tax revenues for up to 26 years. Consistent with the original application submitted by Sun Rae Apartments,LLC,the application includes an approximate $31.556 million project funded through a combination of debt and equity. The applicant's supporting financial information includes updated sources and uses of funds with a revised total development cost of$34.7 million with 80% as debt financing and 20% as private equity. Financial assistance through pay-as-you-go TIF would provide additional revenues to support the required level of debt and project cash flow to repay annual debt service payments. Typical extraordinary redevelopment costs that cannot be supported solely by the project alone could justify the need for public financial assistance and allow the project to proceed as proposed to provide appropriate upfront funding and meet the minimum debt coverage requirements. The applicant indicated city financial assistance is necessary for the project to proceed. City policy limits redevelopment project assistance to 15 years. The Joint Finance Committee reviewed the request on February 23, 2021. The committee consensus was to recommend HRA approval of a 20-year TIF district for Phase 1 and 20 years for Phase 2 with an aggregate of 26 years,which is a deviation of the TIF policy. The group states that the deviation was due to exuberant circumstances that this project would not be completed with the maximum 15 years allowed per the policy. Financial Impact N/A Mission/Policy/Goal The City of Elk River shall utilize TIF to encourage desirable development or redevelopment that would not otherwise occur but for TIF. The Elk River Vision PONE H E o s Y A welcoming community avitb revolutionary and spirited resourcefulness, exceptional INAV service, and community engagement that encourages and inspires prosperity. Updated.August 2020