05-06-10 - Laserfiche WebLink

Home Browse Search

In order to submit a new application to MHFA, SCI is requesting a revised letter of support from the City. The revised letter of support is requesting up to $575,000 in public assistance. The • source of the assistance has not been determined, but potential sources include TIF and the proposal to sell the communications tower to the City. A letter of support is not an approval of tax increment financing, the proposal to sell the tower to the City, or any other form of public assistance. The project must still meet all TIF statutory requirements and undergo a detailed financial review by the City. However, the letter of support is a good faith commitment from the City to provide the requested support if the housing tax credits are approved by MHFA and if the project can demonstrate the need in accordance with the City's Business Subsidy Policy. Preliminary Public Subsidy Review The preliminary TIF analysis performed by Ehlers and Associates indicates that the Arden Village property would generate an estimated$252,000 over 26 years or$184,000 over 15 years. The complete TIF analysis will not take place until SCI is awarded the tax credits from MHFA, which is when the "but for"test will be completed to determine if and how much TIF is justified by the project. SCI is currently proposing to sell the tower to the City for a$1 provided there is a commitment for$575,000 in public assistance,which could be a combination of TIF and cash from the City. For example, if the project demonstrates that $184,000 in TIF is justified, then the City would pay the gap of$391,000 under the current proposal. The tower sale would essentially be a form • of public support for the project. Once the tower appraisal is complete, a more complete analysis will be possible and a counterproposal can be formulated. The request for support increased for two primary reasons. First, the City's approval of the project required additional stone on the exterior of the building. Secondly, the higher request takes into account the proposal to sell the tower to the City, which results in a loss of revenue to SCI. If the tower is not sold to the City, the need for public assistance would be reduced. However, the higher number allows the City to continue exploring the possibility of purchasing the tower but does not obligate the City to purchase the tower. SCI is also applying for a HOME grant from Ramsey County. According to Mary Lou Egan at Ramsey County Community Development, SCI may receive a small amount of funding, perhaps $35,000, in 2010 to support their tax credit application to MHFA. Funding from the County would increase SCI's chances of receiving the tax credits. The project may be eligible for up to $300,000 in support from the County,but they will not tie up the funds in 2010 for a project that is not scheduled to start until 2011. SCI will not know if additional County funds are awarded until May 2011,but Ms. Egan said the project has a good chance of being selected in 2011 because of its location and housing needs in Arden Hills. Grants received by SCI would be factored into the public subsidy evaluation and would reduce any requested need from the City accordingly. City of Arden Hills • FPAC Meeting for May 6, 2010 I\Metro-inet.uslardenhillslAdmin\Committees&COmmissionsIFPAC120101050610-FPAC Memo-Arden Village-Sand Companies.doc Page 2 of 3