TIF Presentation 6/12/17 Site Location Site Plan Joseph - PowerPoint PPT Presentation

TIF Presentation – 6/12/17

Site Location

Site Plan

Joseph Development Housing Experience Valleyhigh Flats (60 units) Rochester, MN Opening February 2018

TIF Request  How the (estimated) numbers would work out: Current taxes paid: $1,496  Projected taxes paid after project completion: $62,810  Projected increment: $61,314 x 94.66% = $58,039 /year reimbursed to property;   City will receive $3,276 in taxes/year in addition to the $1,496  15 years; 5% interest rate = $564,584 present value  NOT an up-front contribution from the City  Bank will take the $58,039 in additional income and allow us to increases our mortgage by $670,000 up front .

TIF Request  Why 15 years?  Investor requires a permanent mortgage ‘no less than’ 15 years. Proposed mortgage will have 30 year amortization.  By having TIF term equal to or greater than mortgage term, TIF can be based on 30 years versus just the length of the TIF note.  TIF counts for “local contribution” points for our Tax Credit Application, thus making it more competitive.

Comparison Current use versus TIF development TIF Comparison 140000 120000 100000 80000 60000 40000 20000 0 No Development TIF Development

Financial Snapshot

Financial Snapshot

Financial Snapshot WITH TIF

Financial Snapshot WITH OUT TIF – Negative Cash Flow

Financial Snapshot WITH TIF

Financial Snapshot WITH OUT TIF – Financing Gap

TIF In Other Projects:  Georgetowne Homes (Rochester) - $650,000 (15yr)  Georgetowne Square (Rochester) - $189,000 (25yr)  Interlaken Place (Waconia) - $300,000 (10yr)  Sibley Cove (Maplewood) - $1,175,234 (25yr)  Washington Court (Minneapolis) - $300,000 (n/a)  Willow Ridge (Vadnais Heights) - $275,000 (15yr)  Village on Third (Rochester) - $660,000 (25yr)  Wash Village East (Rochester) - $195,000 (25yr)  Ashland Place (Rochester) - $250,000 (15yr)  The Meadows (Rochester) - $350,000 (15yr)  1 st Ave Flats (Rochester) - $435,421 (25yr)

Recent TIF awarded:  Edina: $550,000 TIF for 39 units ($14,102 per unit)  Maplewood: $716,000 TIF for 50 units ($14,320/unit)  Golden Valley: $514,804 TIF for 45 units ($11,440/unit)  Minnetonka: $1,000,000 TIF for 65 units ($15,384/unit)  Mounds View: $550,000 TIF for 60 units ($9,167/unit)

Our company has received 15 awards from MHFA for 9% credits; 14 received local contribution.

Benefits of TIF  City would still receive more taxes than they currently are collecting from existing parcels.  City would not be “out of pocket” funds since property would continue to pay existing taxes and 10% of increment.  Project would pay initial SAC/WAC, Permit, and other City fees as result of development.  Project would encourage further redevelopment in area.  TIF makes development more competitive for other funds. Would leverage $11.2 million in private and federal sources.  City will collect more if tax rate increases. TIF is only based on the tax rate the year the TIF district is established.

Timeline  Potential Timeline  June 12, 2017 – PUD Approval & TIF Approval by City Council  June 15, 2017 – Submit application for Section 42 Tax Credits  October 15, 2017 – Tax Credits Awarded (hopefully)  May 2018 – Close and begin construction  February 2019 – Finish construction & tenants move in