7C, Sand Companies Request for a Letter of Support for Housing Tax Credits

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Revised Letter of Support 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 proj ect 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. Preliminar_y Public Subsid_y Review The Financial Planning and Analysis Committee (FPAC) is in the process of reviewing a preliminary TIF analysis performed by Ehlers and Associates. The preliminary TIF analysis 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. FPAC is also reviewing SCI's proposal to sell the communications tower to the City to determine if it would be prudent for the City to purchase the tower. 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 proj ect demonstrates that $184,000 in TIF is justified, then the City would pay the gap of $391,000 under the current proposal. FPAC is in the process of reviewing the costs and revenue related to the tower as well as seeking an appraisal. Once FPAC completes their analysis, a recommendation for a counterproposal will be provided to the City Council. FPAC met on May 6, 2010 to review the request for a revised letter of support. Representatives from SCI were present to answer questions and discuss the proj ect and application with the committee. The Financial Planning and Analysis Committee recommends that the City of Arden Hills issue a letter of support for up to $575,000 of assistance for the Workforce Housing Project on County Road F. This $575,000 does appear to be an appropriate amount of gap financing needed for this $10,400,000 proj ect. It is anticipated that the funding for this support would come from the following potential sources; Ramsey County, cell tower proceeds or TIF. The request for support increased for two primary reasons. First, the City's approval of the proj ect required additional stone on the exterior of the building, and additional arnounts of City of Arden Hills City Council Meeting for May 10, 2010 IlMetro-inetlardenhillslAdminlCouncillAgendas � Packet Information1201015-10-10 RegularlPacket Information1051010 - CCMemo - Arden Village - Sand Companies.doc Page 2 of 3