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City of Roseville, Minnesota <br />TIF District No. 17: Twin Lakes Apartment LLC Proposed Project <br />October 16, 2012 <br />Page 3 <br />debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the developer would <br />finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are <br />available. <br />Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for <br />repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less <br />and therefore bears the risk of not being reimbursed the full amount of their financing. With bonds, the City would still <br />need to make debt service payments and would have to use other sources to fill any shortfall of tax increment <br />revenues. With internal financing, the City risks not repaying itself in full if tax increment revenues are not sufficient. <br />Typically in either case of upfront financing, there is a shortfall payment guarantee with the developer. The developer <br />has requested financial assistance as pay-as-you-go through a developer note. <br />Tax Increment Analysis <br />In order to estimate the amount of TIF revenues generated by the proposed development, certain assumptions were <br />made basetl on the value of the project, construction schedule, and anticipated financing terms. <br />• Estimated base value (1 parcel) as of Jan. 1, 2011 <br />0 04.29.23.31.0023 (EMV of $2,357,200) <br />■ currently classified as commercial-industrial <br />■ anticipated to be reclassified as rental following development <br />• Estimated incremental market value upon completion <br />o$90,000 per unit (preliminary assessor's estimate) <br />0 215 rental apartment units <br />o $19,350,000 estimated market value <br />• Increment based on new building value only <br />• Construction commences in spring 2013 and is completed in summer 2015 (3 phases) <br />o Phase 1: 73 units <br />■ 60% assessed in January of 2014 for taxes payable in 2015 <br />■ 100% assessed in January of 2015 for taxes payable in 2016 <br />o Phase 2: 65 units <br />■ 25% assessed in January of 2014 for taxes payable in 2015 <br />■ 100% assessed in January of 2015 for taxes payable in 2016 <br />o Phase 3: 77 units <br />■ 50% assessed in January of 2015 for taxes payable in 2016 <br />■ 100% assessed in January of 20165 for taxes payable in 2017 <br />• Annual market value inflator <br />o Scenario 1: 0% <br />o Scenario 2: 1.5% <br />• Present value (discount) rate of 4.5% <br />• Tax rates (frozen rate), class rates and future market values remain constant <br />