2009-05-19_Agenda - Laserfiche WebLink

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private investment in the foreseeable future and that development induced by the creation , of the TIF district would yield a net increase in market value for the site. d 1.6 On Apri120, 2009, the City Council passed a resolution setting June 15, 2009, as the . public hearing date for TIF No. 18. The setting of the public hearing date was the first , step in the statutory TIF creation process and does not obligate the City Council to . approve the creation of a TIF district. � 1.7 Since the establishment of the public hearing date, Springsted, the City's financial �� consultant, has reviewed the detailed proj ect information provided by to determine if the _�� project qualifies as a housing TIF district and developed a TIF plan for the proposed �� district, including the "but-for" test and financial projections. s� Housin� District Qualification: Springsted has determined that the 168 housing units _�� within proposed TIF District No. 18 will meet either meet the 20-50 test or the 40-60 test <� with at least 20 percent of the units being affordable to persons at 50 percent of area � median income or 40 percent of the units being affordable to persons at 60 percent of �� median income. The City will require formalization of the affordability mix as part of a a future development agreement _� But-For Test: Springsted has conducted the "but-for" analysis for this project and has � determined that it meets both statutory requirements. They conclude that the proposed :� development 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 proj ected tax increments for the _� maximum duration of the TIF District permitted by the TIF Plan. : Financial Projections: The 2009 assessed value for the Har Mar Apartments is & $5,000,000. Based on the rehabilitation of the 120 one-bedroom units in the five existing � buildings and the construction of the new 48 two- and three-bedroom units, the estimated � assessed value is between $10.6 million and $15.4 million. This increase in value � translates approximately $1.37 million to $2.4 million of potential increment over the life f�� of the district. �� 1.8 If the City Council approves TIF District No. 18, the City will negotiate a development � agreement with Aeon on the terms for use of the funds generated in the district. The f�� City's TIF Policy will set general parameters by which to commence these negotiations. � This policy advocates using the pay-as-you-go method of financing, which means that the � developer is responsible for finding upfront financing for the proj ect and that the City E� will reimburse the developer for eligible costs as the increment is generated. This form of ; financing decreases the risk to the City as it is not relying on proj ected future revenues to � cover debt service on a City bond issuance. In addition, the policy also outlines a 20 ,� years as the guideline length of repayment for low-to-moderate income housing proj ects; however, the policy states that this term can be extended by the City Council to protect community interest. 2.0 STAFF RECOMMENDATION � 2.1 Staff recommends that the HRA support the creation of TIF District No. 18 to provide financial assistance to Aeon to undertake the construction of approximately 48 new Page 2 of 3