4.1. EDSR 03-28-2017 El .�.� Request for Action
Ricer
To Item Number
Economic Development uthority Finance Committee 4.1
Agenda Section Meeting Date Prepared by
General Business March 28, 2017 Amanda Othoudt,Director of Economic
Development
Item Description Reviewed by
Jackson Hill Residential Suites Housing Tax Cal Portner, City Administrator
Increment Financing Application Reviewed by
Action Requested
Review application and provide a recommendation to the Housing and Redevelopment Authority
establishing a Housing Tax Increment Financing District No. 24
Background/Discussion
The Jackson Hills Residential Suites project is a proposed 40-unit market-rate and affordable housing
project on Jackson Street. The developer applied for Tax Increment Financing assistance through the
establishment of a Housing TIF District to finance the portion associated with the affordable housing.
Springsted completed a but for analysis and determined without TIF assistance the project would not
proceed due to the income restrictions of occupants and insufficient cash flow to finance monthly
expenses and debt service.
The developer's proposed financial package includes long-term,private financing of$4,800,000 from
Lakewood Mortgage, $300,000 in equity from Briggs Properties, Inc. and $400,000 in Owner Cash Equity
from PLB Rev Trust, and $500,000 in Tax Increment Financing for a total estimated project budget of
$6,000,000.
The requested TIF term is 15 years. To qualify,at least 20% of the units would be occupied by persons or
families with incomes no greater than 50% of county median income or at least 40% of the units would
be occupied by persons or families with incomes no greater than 60% of county median income for the
duration of the district.
Staff completed the Housing TIF Worksheet which scored 28 points indicating the project is not eligible
for TIF. The project meets criteria set forth in Section IV of the city's Tax Increment Financing Policy.
Based on the Estimated Market Value of the project as calculated by Sherburne County,the project's
EMV is approximately$3,310,000 or$82,800 per unit and didn't receive any points in this category.
However,with a minimum assessment agreement,the developer could realize an EMV of up to
$4,200,000 and receive enough points to meet the low-eligibility guidelines according to the policy. The
scoring worksheet indicates that at this rating,the developer is only eligible for 65% of the request.
Points were given based on conversations with the developer that the project will include a community
volleyball court and that the developer will incorporate the goals of Energy City and include efficient
design and materials in the construction of the project.
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The developer indicated that Phase II of the project will occur within the 18 months. Points were
awarded in the worksheet for the high likelihood of unsubsidized spin-off development.
Financial Impact
The TIF District would generate approximately$1,351,985 in increment over 26 years. The city would
retain 10% or$135,199 for Administrative purposes. The net amount available for the Developer is
approximately$1,216,779 or 90% of the total gross tax increment dollars available. In accordance with
the policy the developer could receive approximately$434,483 inclusive of principle and interest over
10.5 years. The city could receive approximately$782,296 in surplus revenues to reallocate to future
affordable housing projects in the city.
Attachments
■ Housing TIF Application and Supporting Materials
■ Springsted's analysis and supporting documents dated March 24, 2017
■ Housing TIF Worksheet—Completed by city staff
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Finance Committee Agenda
Packets\2017\March 28 2017\4.1 sr Jackson Hills Residential Suites HousingIll'Application Review.docx