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Department Approval . � t�i � � REQUEST FOR COUNCIL ACTION Date: October 22, 2012 Item No.: 13.a City Manager Approval Item Description: Discussion regarding the redevelopment of the Hagen Property at 2785 Fairview Ave. into marlcet-rate apartments and the use of Twin Lakes TIF funds to assist in the project. BACKGROUND The Hagen property, located at 2785 Fairview Ave, currently contains a multi-tenant trucking terminal. In 2009, the City purchased approximately 2.05 acres of the property for future Twin Lakes right-of- way. The City has been approached by representatives of the property and a developer regarding the redevelopment of the remaining 5.83 acres of the Hagen property into 215 market rate rental apartments. The developers, Twin Lakes Apartments, LLC, are proposing to construct three apartment over a three- year period beginning in the Spring of 2013. They are proposing to have 1, 2, and 3 bedroom units with high quality finish and amenities. The development will be served with underground parking for the � tenants and a 4,500 square foot office/clubhouse. Preliminary renderings and drawings of the site are included in Attachment C. � As part of the discussion with staff, the developers have identified a financing gap and have applied for �� TIF assistance. Staff has worked with Twin Lakes Apartments, LLC to determine if TIF is needed and �� if the project is eligible to receive assistance under the Twin Lakes Public Financial Participation � Framework. Review of the information indicates that the project will qualify for assistance under the � City guidelines. (See Attachment D). � The developer estimates that the total project cost far the development will be approximately $32.6 million. To fund the project, the developers will be bringing in $7.4 million of their own equity and a $23 million mortgage. The remaining amount of (approximately $2.3 million) is the gap in funding the proj ect. Mikaela Huot, the City's TIF consultant from Springsted, has prepared a detailed memo regarding the project and the financing gap. As can be seen from the memo, (Attachment E) Springsted has determined that the project would not be able to proceed without TIF assistance and meets the required , - "but-for" test. The Springsted memo provides analysis showing that based on the proposed development and schedule as well as conservative assumptions about the market value increase, the property will go from the current assessed value of $2.4 million to $21.8 million. This development will generate up to $4.4 �� million in gross tax increment over the remaining lifetime of the district. Page 1 of 3