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City of Roseville, Minnesota Section J Findings and Need for Tax Increment Financing In establishing the TIF District, the City makes the following findings: (1) The TIF District qualifies as a housing district; See Section E of this document for the reasons and facts supporting this finding. (2) The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future, and the increased market value of the site that could reasonably be expected to occur without the use of tax increment would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan. The proposed development is a rental housing project consisting of the rehabilitation of approximately 120 units and the new construction of approximately 48 units in the City of Roseville. All but 12 of the total units rehabilitated will be affordable to persons at or below 60% of the area median income. The City has reviewed project information submitted by the proposed developer showing that the cost of providing low-to-moderate income housing makes the proposed development infeasible without some level of assistance. Creating high-quality affordable housing in the proposed TIF district area entails the acquisition and subdivision of the existing property, complete rehabilitation of the existing buildings, the construction of new affordable housing and improvements to related infrastructure. Phase 1 and Phase 2 will be financed separately with each phase securing an allocation of low-income housing tax credits. Although Phase 1 of the project has secured funding from multiple additional sources, Phase 2 funding is not anticipated to leverage as many additional funding sources and shows a financing gap to be filled with TIF. Therefore, it is believed that Phase 2 would not happen "But-For° the TIF. Furthermore, the funding entities participating in the Phase 1 financing require the completion of Phase 2 of the Project, which constructs the 48 new affordable family-sized units. Therefore, we conclude that the proposed Project (Phases 1 and 2) would not happen "But-For° the TIF. The increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the TIF Plan. Without the TIF District, the City has no reason to expect that the rehabilitation and new construction would occur without assistance similar to that provided in this plan. [If we are to agree with the assumption] that the proposed project maximizes the site density, then it is reasonable to assume that no development will occur that will create a greater market value than that which is proposed in this project. Therefore, the City concludes as follows: The City's estimate of the amount by which the market value of the site will increase without the use of tax increment financing is $0, beyond a small amount attributable to appreciation in land value. If all development occurs as proposed, the total increase in market value would be approximately $16,917,395, which includes a 2.5% annual market value inflator. c. The present value of tax increment revenues from the District for the maximum duration of as permitted by the TIF Plan is estimated to be $938,650 (See Exhibit V). SPRINGSTED Page 4