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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 6 <br />assistance' scenario includes debt coverage of 1.10 upon project stabilization. The proforma analysis described <br />previously has indicated that any TIF assistance would be usetl to provide sufficient cash flow to meet the annual <br />debt service coverage requirements in the operating proforma. The `without assistance' assumes additional equity to <br />meet the targeted debt coverage ratio of 1.10 and calculates modest returns to the developer that are below market, <br />thus causing the project to be infeasible. <br />There is no set IRR benchmark that dictates whether a project needs TIF assistance or not. There are general <br />market indicators that determine a project should be "doable" with a 10-year average return of 10-20%. However this <br />is only an indicator and may or may not apply for each individual project, especially in today's market, and there may <br />be other factors impacting the developer's ability to proceed. The developer has stated that the project will not occur <br />without TIF assistance. Therefore, the City should view the IRR calculations as one factor in arriving at a tlecision for <br />this particular project. <br />Draft Business Points <br />Should the Council choose to move forward with the project, it would enter into a Development Agreement with the <br />developer, Twin Lakes Apartments LLC. The Agreement would include the requirements of each party and the <br />provisions of tax increment assistance. Based on initial discussions with city staff and the developer, we recommend <br />the City consider the following terms for inclusion in the agreement: <br />• Type of Assistance <br />o Pay-as-you-go for reimbursement of certain eligible costs <br />• Maximum Amount of Assistance <br />o $2,200,000 <br />• Maximum Term of Assistance <br />0 17 years <br />• City Retained Amount <br />0 20%: pooling and administrative <br />• Amount Pledged to Developer <br />0 80% <br />• Eligible Project Costs for Reimbursement <br />o Extra ordinary Redevelopment Costs <br />■ Demolition/Site work <br />■ Structured Parking <br />■ Road/Utility Costs <br />• Construction schedule <br />o For each phase <br />o Commence <br />o Complete <br />• Minimum Assessed Valuations <br />