2A, Presbyterian Homes & Library Proposal

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Memo To Sue Iverson—Finance Director From: Stacie Kvilvang Date September 9,2010 Subject.- Proposed TIF District—Presbyterian Homes Redevelopment Presbyterian Homes has approached the City about its proposed redevelopment of portions of their facilities on their existing site. They have inquired about the possibility of the City providing Tax - Increment Financing (TIF)to offset some of their costs associated with the redevelopment. Based upon the existing site and qualifications required to create a district, we recommend that the City Council consider creating a renewal and renovation district, which has a sixteen (16) year term. In order to qualify for this type of district,the City must find: 1. That 70 % of the area of the district is occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures; 2. 20 percent of the existing structures are structurally substandard; and 3. 30 percent of the other buildings require substantial renovation or clearance to remove exiting conditions In order to comply with the first condition, only 15 percent of each parcel in the district needs to be occupied. Since this district is going to be comprised of one parcel, 15 percent of that parcel needs to be occupied by the above referenced items (which is the case). For purposes of determining compliance with item#2, a building is considered to be structurally substandard if the cost to bring it into compliance with current building code costs more than 15 percent to construct a new structure of the same square footage and type on the site. Based upon preliminary TIF estimates, the project will generate approximately $1.3 million in present value TIF (see attached TIF run). Just because the project generates this amount of TIF, does not mean that the City will provide this amount of assistance. We will complete an analysis of their proforma to determine the appropriate level of assistance and what qualifies for reimbursement from TIF. TIF is generally provided to a development for eligible, qualified costs such as demolition, environmental remediation, relocation, land write down, site improvements, various fees, etc. Typically in redevelopment, we recommend reimbursing for extraordinary costs that a project building on a "green field" site would not have (i.e. demolition, remediation, relocation, land write down, extraordinary site costs such as grading and fill, etc). It should be noted that TIF to write down the cost of the land is not needed for this project since Presbyterian Homes currently owns the site. Please contact me at 651-697-8506 with any questions. 3060 Centre Feints Drive -1105 Roseville, MN 55113 EHLERS LEADERS IN PUBLIC FINANCE Phone:6 5 -6 - 6