7.2 SR 01-03-2022 - Laserfiche WebLink

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Request for Action To Item Number Mayor and City Council 7.2 Agenda Section Meeting Date Prepared by Public Hearing January 3, 2022 Brent O'Neil, Economic Development Director Item Description Reviewed by TIF 28 Jackson Hills Residential Suites 2nd Cal Portner, City Administrator Reviewed by Action Requested There are two actions requested for this item: 1) open the posted hearing for public comment 2) approve, by motion, the resolution creating Tax Increment Financing (TIF) District No. 28 and corresponding TIF Plan. Background/Discussion The city received an application for Tax Increment Finance (TIF) from Briggs Companies to complete a multifamily housing project known as Jackson Hills II at Jackson Avenue and Sixth Street. The project is similar in size and design to the Jackson Hills apartment project which recently opened and received approval of TIF in 2019. Key parameters of the project and summary of the TIF request are stated below: ■ 44-unit apartment building with a mix of studio, 1-, 2-, and 3-bedroom units. ■ Twenty percent of units are proposed as income restricted, primarily studio units. ■ 88 total parking spaces, one-half indoors and one-half surface parking. ■ Project budget of $8.59 million - $6 million in financing, $2.59 million from equity sources. ■ Current taxes are at $4,400. Developer projects taxes after completion at $88,000. Based on preliminary taxable value estimates from the county, actual taxes may exceed $110,000. ■ TIF request: 15 years at 90% increment capture during that period. ■ Overall site excavation and grading is in excess of typical costs and is due to extraordinary mitigation for unbuildable soils. This cost is estimated at $850,000. Baker Tilly has been engaged to provide a review and analysis of the request. The attached memo summarizes Baker Tilly's review and contains its evaluation of cost and revenue assumptions, qualifications as a housing TIF district, and financial need. The analysis includes TIF participation in the project at $850,000 (principal value). The analysis indicates the project would not move forward butfor the use of TIF due to the extraordinary costs related to site development and soils correction. The project has been reviewed by the HRA-EDA Joint Finance Committee and recommended for approval, with a final recommendation expected from the HRA at its January 3, 2022, meeting. Following consideration of this resolution, additional actions of the city will be necessary for implementation. An agreement between the city and developer formalizing specific terms, conditions, and obligations of the TIF is expected to be brought forth at a The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires prosperzly. M TUREJ Updated.• August 2020