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4.1. EDSR 04-25-2017 1f Cty of Elk Request for Action VE To Item Number Economic Development Authority Finance Committee 4.1 Agenda Section Meeting Date Prepared by General Business March 28, 2017 Colleen Eddy,Economic Development Specialist Item Description Reviewed by Jackson Hill Residential Suites Housing Tax Amanda Othoudt, Director of Economic Increment Financing Application Development Reviewed by Cal Portner, City Administrator Action Requested Receive information/update on the Jackson Hill Residential Suites TIF Financing Application. Background/Discussion The applicant has notified staff that he will be postponing his application until the May 301h EDA Finance Committee meeting. The applicant will be in attendance at this meeting to update the group on his revised plan to move the project forward. Financial Impact N/A Attachments ■ March 28, 2017 Jackson Hill Redevelopment Application EDA Finance Committee Packet ■ Jackson Hill TIF Redevelopment Application ■ Springsted's Analysis ■ TIF Housing Calendar ■ TIF Redevelopment Calendar ■ Memo from applicant AU E 1f Cty of Elk Request for Action VE To Item Number Economic Development uthonity 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 butfor 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 EW 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. NATURE 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:ADepartments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Finance Committee Agenda Packets\2017\March 28 2017\4.1 sr Jackson Hills Residential Suites Housing TIF Application Review.docx haW 'Feutww,f 2,01 ZZ)1'7 S �V <> City of wVT A Vr2k;r ' ax Increment Financing Pol'icy & Application HOUSING Amended:April 2015 Amended: February 2014 Amended: May 2006 Amended: March 2000 Adopted: AUgUSt 1991 Ciry of E]k River Econon-k Developnicnt Division 13065 Orono Parkwiy 1',-'Ik lbver,MN 55330 763.635-1040 Table of Contents 1. Policy Purpose 3 11. Objectives of Tax Increment Financing 3 111. Policies for the Use of TIF 4 IV. Project Qualifications 5 V. Subsidy Agreement & Reporting Requirements 6 VI. Application Process for TIF 6 Vi,l. Meeting Schedule 7 Vill. Samp�le But-For Analysis 9 IX. Application Review Worksheet: Housing Projects 8 Application I I (-'rrY of E']k f6ver Tax hicren-lerit 9rl"Incing P(,)I ic-N Application- H ousiog killelided April 8 2015 0 W E 0 1 0 0 T Rage 2 of 14 =NAYiUOFREI II. POLICY PURPOSE For lb purposes qflhis docuyi,,en, the leivi "ClIy"shall inc-lilde Me E'lk- Rl.'ier Econoillic Developmeni z4ulbon't),, and I Ioushgg and Redevelepvenl llulhof �)�. The purpose of this policy is to establish the City of Elk River's position relating to the use of Tax Increment Financing (TIF) for I lousing private development above and beyond the requirements and limitations set forth by State Law. This policy shall be used as a guide in the processing and review of applications requesting tax incren-lent assistance. The fundamental purpose of tax increment financing in Elk River is to encourage desirable development or redevelopment that would not otherwise occur bul fir the assistance provided through TIF. The City of Elk River is granted the power to utilizeTIF by the Nlinrlesota Tax Increment Financing Act,as arriended. It is the intent of the City to provide the minin-mm amount of TIF, as well as other Incentives, at the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case by case basis, taking into consideration established policies, project criteria, and demand on city services in relation to the potential benefits froin the project, Meeting policy criteria does not guarantee the award of TIF to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. 11. OBJECTIVES OF TAX INCREMENT FINANCING As a matter of adopted policy, the City wifl consider usingTIF for Housing to assist private devc1optnent projects to achieve one or more. of the following Objectives: • To encourage additional 1111SUbsiclized, private development in tile area, either directly or indirectly through "spin off" development. `I,o facilitate the development process and to achieve development on sites which would not be developed without TIF assistance, 'l'o remove blight arid/or encourage redevelopment of residential areas in the city that result in high quality redevelopment and private reinvestment. • To offset increased costs of redevelopinent (i.e. contaminated site clean up) over and above the costs normally incurred in development. • To create opportunities for affordable housing, • To contribute to the in-iplementation of other public policies, as adopted by the city fron-i time to time, such as the promotion of quality Urban or architectural design, energy conservation, and decreasing capital and/or operating costs of local government, • To enhance and diversify the City of Elk Diver's housing stock. City of F.1k Mver'Fax hicrement Fiiiaiicing policy& Application- f lousing ,,linencled April 8 20 15 0 W ( a f 0 i Page 3 of 14 INATUREI Jill. POLICIES FOR THE USE OF HOUSING TIF a, When possible,T[Fshall be used to finance public 'improvements associated with the project. The priority for the use of"I'll" Funds is: 1. Public iniprovements, legal, administrative, and engineering costs. 2. Site preparation, rite improvement,land purchase,and dernolition. 3. Capitalized interest, bonding costs. b. rlF assistance will be provided, to the developer upon receipt of the. increment by the City, otherwise referred to as the pqy-as.you-go method, c. A maximum of ten percent ('101/'�)) of any tax increment received from the district may be retained by the City to reimburse administrative costs. & Any deN�eloper receiving TIF assistance shah provide a rl'unimuni of ten percent (1011,/o) owner cash equity lovesti-nent in the pro)ect. e. TIF will not be used in circumstances where land and/or property price is in excess of fair market value. E Developer shall be able to dernonstrate a inarket dell-land for a proposed project. TIF shall not be used to sLipport purely speculative projects. & TIF'will not be utilized in cases where it would create an unfair and significant competitive financial advantage over other projects in the area. L TIF shall not be used for projects that would place extraordinary demands on city services or for projects that would generate significant environtriental impacts. i, I'lle developer must provide adequate financial guarantees to erasure completion of the project, including, but not limited to: rulinimurn assessment agreements, letter; of credit, personal guaranties, etc. j. The developer shall adequately demonstrate, to the City's sole satisfaction, an ability to complete the proposed project based on past development experience, general reputation, and credit history, among other factors, including the size and scope of the proposed project. k. For the pUrposes, of under-writing the proposal, the developer shall provide any recluested market, financial, environmental, or other data requested by the City or its C011SUltants. 1. All Tl F proposals shall optimize the private development potential of a site. City of Elk 1tver Tax Incretnent Financing Policy&Application-I fousing f 0 0 T Aniended April 8 2015 Page 4 of 14 INAWREJ IIV. PROJECT QUALIFICATIONS I fousing'I'l F projects considered by the City of Elk River 1-nUSt meet each of the following requirernents: a. To bP eligible for'FIF, a project shall result in: A rninimurn increase of$37,5,00 per year in property taxes, excluding the state portion;and �,/Iii. Have a market value of at least $1,250,000 upon completion. b. The project shall meet at least one of the objectives set forth in Section 11 and satisfy all the provisions set forth in Section III of this document, c. The developer shall clei-nonstrate that the project is not Financially feasible but-forthe use of'l"TF d. The project shall comply with all provisions set forth in the Tax I ricrernent Financing Act, Minnesota Statutes 469,124 to 469.134, inclusive, as amended, and Statutes 469.174 to 469,1794, inclusive, as amended, e, The project must be consistent with the City's Cornprehensive Plan,Land 'Use Plan,and Zoning Ordinances. f, The project shall sene at least two of the Mowing public purposes: 0, Enhancement or diversification of the city's housing stock. • Development that N%ill spur additional private investment in the aret. • Fulfillnient of defined city objectives Such as chose identified in the City's Comprehensive Plan and the City's HOUSifIg and Redevelopment Strategic plan, among others. • Removal of blight or the rehabilitation of a high profile or priority site, V. SUBSIDY AGREEMENT & REPORTING REQUIRMENTS All developers/busines ses receiving Tax Increment assistance front the City of Elk River may be subject to the provisions and teClUireinents set forth by the CitY's Business Subsidy Policy as amended and Nfinnesota Statutes Sections 'I 16J.993 to 116J.995 (the "Minnesota Business Subsidy Law"). V1, APPLICATION PROCESS FOR TI'F 1. Applicant submits the completed application along with a $10,000 application deposit, to be refunded for any,portions not utilized if the tax increment project does not proceed. The application deposit will be used toward the cost of services provided in the evaluation of Financial feasibility, establishment or modification of the TIF district, and preparation of legal documents and agrecinents. An additional deposit of$10,000 will. be required for projects that require meeting statutory eminent domain and/or redevelopment substandard tests. Projects that demand professional services in excess of the initial deposit shall be required to reirnburse the City for the additional expenses. City of Elk River Tax Increment Finmcing Policy&Application-Housing 0 W I a f 0 0 V Amended April 8 2015 page .5 c)f 14 INA TUREI 2. C'uy staff reviews the applica6on and completes the FRAI'Sitlg Worksheets. The Housing Workshects are prin-i-ardy designed to score the desirability of the pt(,-)posed project. Housing projects -vvill be evaluated on a case-by-case basis and as the pro'ccts meet the CV:V S desired objectives, 3, Results of the I lousing\Vorkshects are Submitted (.(.-) tileappropriate governing authorities (EDA or HRA ,) for recomtriendation to the Cit)` COLHIC11 of approval. or denial of the request. 4. If prelimiriary approval is granted, the Tax Increment Financing Plan, along with all necessary notices, resolutions are prepared by (sity staffind/or consultants. 5. Notices are published and sent to the.county and school board. 6. Public hearing(s) on the proposed request are held. I. The City Council grants final approval or denial of the request. CltY of 111k River Tiix Increment Imancing P()hCY&, Apphcaljon� Housing Armnided April 8 2W5 Page is of➢4 INAWRE V11. MEETING SCHEDULE 2015 Housing and Redevelopment Authority & C'ity Council Meeting Schedule For Review of Applicaitions rehated to housing assiwtazlcc Itt� -- 77/77- ii ioi 1P "LICICM,/i%i ,E1 oe HR+ ,,, ��,/ ��!i t EALIYE ��/%/ rrrratk 1 fla �,� O%/// CIN; and esday), ,/� iii ,, „ ;7 >Feb 2�� ,,, , ;� , dI ;,,,,��„��,,,, Fels 23 Mar 24 May 4 May 4 7 'Jun,,/;3C / Jan' Apr 27 May 26Jully 6 Jul 6 - " Jun. 29 Jul 28 Sep 8 See 8 �`J12 ,,, ,A2 Ct6 Auq 31 Sep 29 Nov 2 Nov 2 Oct 26 Nov 24 Jan 4 2616 Jan 42016 ov,36 22 66,, ° „ aMJ�1 24fi6 Dec 28 Jan 26 (2616) Mar 7 2016 Mar 7 (2016) ALL REQUIRED APPLICATION MATERIALS MUST BE SUBMITTED, BY THE DEADLINE OR YOUR APPLICATION 'VV''ILL RE POSTPONED TO THE NEXT MOKITH, Cin,of Elk iziver,rax Increinent financing Policy&Application- Ifousing � D w E R E 0 0 T lne°i ded April 8 2015 Vill. SAMPLE BUT-FOR ANALYSI'S WITI I NO WITI I TAXABATI-'MENT TAX ABATEMENT SOURCES AND 1;;ES SOURCL,S AND USF�S SOURCES S0U,,RCJ-'1S Mortgage 9,600,000 8,667,000, Equity 2,400,000 2,400,00 'Fax AbAtement, 0 933,000 TOTALSOURCES 12,000,000 12,000,000 USLI'S USES Land 1,5()0,000 rite Work 300,000 300,000 Soil Col rectI011 468,000 468,000 Dern(Aidon 100,000 100,000 Rcicwation 65,000 65,000 Subtwil Land Costs 2,433,000 2,� 33,000 Coils tructI011 6,750,000 6,750,000 Finish Nfiarlufacturii-.Ig 250,000 250,000 Subtotal C oilstructicrn costs 7,000,000 7,000,000 Soft Costs 350,000 350,000 Taxes 35,000 3-5,000 I il Inance Fees 850,000 850,000 Procct Manager 542,000 542,000 Developer Fee 540,0(.0 540,000' C'011011gericy 250,000 250,000 Subtotal Soft Cost's 2,567,000 2,567,000 TOJ'AL USE'S 2,00(,),()()() 12,000,000 Income Statement 111con-le:tatetncnt Sq Ft. Per Sq. fltl Sq, Ft. Per Sq. Ft Rent.-Space I 1 0,0 58,00 wo,000 100,000 $8.00 80(),()()o Rent-Space 2 25,000 $&50 212,500 25,000 58.50 212,500 Rent-Space 3 25,0()0 KOO 225,000 2-3,000 59.()0 225,000 C)ther $0.04) 0 0 SUM 0 1,237,5001 T,237,500 morigage 201'erm 1,051,646 20 Term, 949,439 9.00% Imcrest 9M"/c, Interest 9,6001,000 Principal 8,667,000 Principal Net Tncome 185,854 288,061 Total Return on [,,quity - 7,74'`G 12.00'`/fl City of Elk River Tax Increnwor Fitiancing Policy&Application- lJousing Ail'iended April 8 2015 a I D I f Page 8of 14 INATUREI 2,015 Financial Incentive E ft Application Piver Housing Tax Increment Financing 1 . PROJECT INFORMATION property Information 661rasepiinl) Address: xxx Jackson Ave —Parcel Number: 75- 134- 2303 The project will be: X Housing Other The project will be: Owner Occupied X Leased Space If Leased Space 5013ercci-it Occupied 6 months after Certificate of Occupancy 'I(-")tal-Amount of Tax Incren-sent Requested: 500„000,,,.rcyeirs, City Portion. Annual $ 11k Poral oral$ 165k County Portion: Annual 5 11k Total$ 165k ISD 728 portion; Annual$ ilk Total S 165k Current Real EstateTaxes on Project Site:: 2748.00 LJEstit-nated Real Estate Taxes upon Completion: Phase I phase 11 Construction Start Date 'Z-1 7 ("onstructiOn Completion Date 5-18 Percent of project complete on December 31, current\,car, 201% 11. CONTACT INFORMATION Public Information Notice Generally,correspondence to and from Staff is considered public information. Specific data related to a fuiancial assistance request is deemed not public. Firancial Information, Financial Statements, Net worth(calculqtions,Business Plans, Income and Expense projections,Balance Sheets, Customer Lists, Income Tax returns. Mien public financial assistance is received,only the following remains not public: Business Plans, Incorneand Expense projections,Customer lists,Income tax returns, design, market,and feasibility studies not paid for with public funds. The city does allow an applicant aI I IN, to submit sensit' e financial.information directly to the City's financial consultant, for additional security. Property Owner Information Okasepfinl)Namei PLB Rev Trust E- mail address: Address: -1902.......... rt Sire-el-- S,i ite .5nn-F City of Elk Fbver Tax Increment Financing Policv& Application- Housing Amended April 8 2015 Page 9 of 14 INATURERE1 Ciry Elk River srar,. M'N,c,,I, 55330 phcmc : 612-9,19-1561 Lcgal Nairne of Business: erv, L LC, Check One- Proprietor -Corporatio-wt X Partnership Federal ID ft State 11) 4 Agent Information (priql) Saw as Property Owner E:] Different, as below L] (Cbte,k onn) x Pacne: Patrick 6Eggs 11'niall address: pat@thebrlggscompanies.com: Address. 19021 Freepo 'Street Suite 500 EI-k Ri'yer 55330 ;Ity /,tip Code Phone (w): 763-633-1080 Ill. SIG:NATU'RE I certify that Political, Casino, Sports Facility, or I"o rilographic Enterprise. I further certify that all information provided in this application is true and correct if.) t[bc best Of illy knowledgc. I authortzc the cm,of Elk River ,in(:[ (lie 1 anCe CL)IIJIllittee to Check C redi t re fef ell Ces and vcrify finalicial and orlier inforniam,'mi. I further agree,if approved, to the to-mil security and guarantees reqUired by the Sul)sidy po)licy� I agree io provide anyadditional inforniation as may be requested by the city. Agreementto Pa Costs of Review It is the poticy of the ("try of Elk River tr.) require applicants to Pay Costs 1.11CUrred by the City in revicwIng, and acting Upon applications, so that these costs arc not borne by the taxpayers of the (_Jityl These costs include all of the City's cwt-of-pocket costs for expenses, Including the City's costs for review of the application by the City's Financial Consultant and City Attorney, or other consultants, recordixig fees,and necessary publication costs. The application processing fees cover-anticipated costs;costs incurred above the application fee.NvAl be invoiced as they are incurred,, and payment, will be due xvithin thirty (30) days Application fees are not refundable, rhOUgh any unused portion is returned at the request Of the applicant. If p,'Irvillent is not received as required by this agreement, the Civy nlay su,,pciad the appliCaLion review process and inay deny the application for failure to coll-lPly with the requirements for processing the application. Payrnent for cost,, will be requiied whetlier the application is granted or denied. 'I'lle Uji(Imsigricd has received (he City's polic), regarding the payrnent of costs of review, understands that reinibursenient to the City of costs incurred in reviewing the application will be required, agrees to rehribUrse the City ais required in the policy and inake payinent when billed by the City, and agrees that the application inay be derned for faill.ltC to reaiiibUrSC the City for costs as provided in the policy. Note. All Major sh,,itehoAders will be required to sign perscmal guarantees and 9 nuillillurn asscssnienc agreenient if Lip front financing,of the project is required ail PLICANT SIGNATURE L/ V TITLE Mianaging Member DATF- 1-9-17 Cir,ofl,�"Ii,k- biter T,,t-,Iiictea)-ict)ri4it-iaisiciii 9 Poijcv&Al,)I)Iicition-fli)using Alnended April20 8 t5 Page 10 of 14 INATUREI IV'. PUBLIC PURPOSE, It is the policy of the Cit),,of Elk liver that the rise of Tax Increment Finaricing,should resnIt in as benefit to the public. please m(ficate how this projvci will serve a public purp(..)Se: X .Job Creation/Retention (Complete table in Section V). —New industrial development which will restili in additional private, investinent in the area. X Lnha — - ncement and/or divetsification of the City of 1.1k River's economic base, XT'he project contributes to the fillfflInient of the City's Economic Development Strategic Ilan, Removal of blight X Rehabilitation of a high profile or priority circ. x_Srgn1ficantIv increase the Cio�'s t.;ix lxisc, V. SOURCES & USES S()URC E's NANME' AMOUN]" Bank loan Lakewood Mortgage $ 4,,800,000 Other Private brands Briggs Properties, ft $ 300,000 Owner Cash Equity PLB ey Irust $ 400,000 Teed Grant/Loari $_ State (,rant/Loan $ F".DA Micro loan $I- 1 1,1 ax Al)atcrinerit $ 500,000 ID Bonds $ TOTAL $ 6,000,000 USFS rk NIO 1-1,NJ---, $ Q40 �009 Land �cquisluoll Site Developinent $ 300,000 C $ 4,855,00 ,onstruction Machincil. , & F.',quipment $ Architectural & f,_ngineering Fees $ 75,000 1-,egal Fees $ 10,000 Intcrest Duntig Constructioll $ 130,000 Debi Service Reserve $ n ringen c ie s $ 230,000 TOTAL $ 6,000,000 V1. ADDITIONAL, DOCUMENTATION AND CHECKLIST I'le,ase provide one paper and one electronic cc-)p)" c)ffollowing: (Incornplete applicat ons will delay ew of aii application) Application deposit of$10,000,with any Latused portion to be refunded if project does not proceed. _13) Written Narrative; Please give a brief SL1r7J11Rr`()fY0L1r business, its prOLIUCLS or service, the project and how this subsidy will impact VOLIf project. The narrative should inclwlea statement dcrrioristrating how the project meets the ptiblic purpose in IV ('above). City of El Rilver Tax Increment Financing Policy Sk Application- th.nviing F 0 W i R F 1 8 Y Amended April 8 2015 NAWRE Page I I cid-t4 1 1 Business Plan, ThC business planshould include the foflowuilg: 1. Description of Business 1 Ownership 3. Managernerit 4, Date Established 5. Products/Servicc.s Cr, Future Plans T. Market f0f BUSHICSS D.) Project Proforinal I. SOIJECCS and LlSeS Of fLUICIS tO Finance the project, and 2. Operating cash fIOW ASqUnlptionS that include: a. Prospected fCVCf1UCS1 b. Openving expenses, c. Net operating Mcon-ic, and d. Ant-Mal debt service and loan paynients. F) Financial Statements for previous Two Years and the Current year to (late Pro &Loss Statement Balance Sheet F) Financial Prqecttolis f(.,)r TCMI UJ) to 10 YCUS' G) Personal Financial Statements of all Major Sliareholders,Partners, Guarantors 11) L&tter ofCommitment froin Applicant Pledging to Compictc During the Proposed Project Duration I..cttcr of Commitryient from the Other Sources of hilancing, Stating Terms and C"(-mdi6OT1N of their Participation ii-i Project Completion Written statement of contact information (Name, Company, Address, Email, Phone, Fax) for project tear, tincludfflgAttorney,Accountant, Financing SOUrCCS i7a nclers ParMers, erc,..),Parent Company, Architect Sensitive financial dOCUlllC11tS,While nest-PUbhc information, naybe,submitted directly to tile City's Financial consultant 1)),signing tile. attached coll fid ell fiality agreement, for additional confidentiality. Tile atta I d C fidentlalWl Agreement rnay be sip led and included with tile application cnC —1 ) Constructdon Plans and Iternized ProJect Construction Staternent —L) Attach the following documentation as Exhillits Exhibit A — C(-.)rl)oratioi-i/P.irtnersliii.) Description 7- Exhibit B—Lisr of Shareholders/Partners — Exhibit C—Bul-l"ot-Analysis ------7—Exhibit 1)—List of Prospcctive Lessees (if applicable) v E`Xhibit E —Legal Description —NT) Site and Constructiorl, Plans Cit),of E`lk RiverTax Incremem Financing Policy&Appheariorl- .1 lousirip Anactided April 8 2015 NATURE Page 12 of 14 I I CONFIDENTIALITY AGREEMENT This agreement is made this,27 day o by and between e; a a , hereinafter"Developer,"and Sprindsfed ldcorpo' rated, a Minnesota corporation, hereinafter"Soringsted." WHEREAS, Developer is tjt�04 o'4- hereinafter the"Project," pursuant to a (form of agreement)with (public entity), hereinafter the"City," dated and WHEREAS, Springsted has been hired by the City to investigate certain financial aspects of the Developer and the PrqJect; and WHEREAS, in conjunction with such investigation, Springsted desires to examine the financial information of Developer relative to Developer and the Project; and WHEREAS, Developer is willing to disclose Such information only oil the condition that such information be kept confidential. NOW, THEREFORE, in consideration of the terms and mutual covenants contained herein,the parties agree as follows: I. Developer agrees to make its financial information, development pro forma and projection, budget information,and such other financial information concerning the Project as Springsted may reasonably request,hereinafter the "Information,"available for inspection by Springsted, but solely for the purpose set forth above. 2, Springsted shall accept the Information in strict confidence solely for that purpose and shall make no other use of the information, or disclose it to any other person or party, including the City, without the express written consent of Developer, Notwithstanding the foregoing, Springsted may use: the Information in summary form only to report its findings to the City provided that Springsted first presents its proposed report to Developer and obtains Developer"s written consent to ensure that no inadvertent disclosures of confidential information or other inaccurate information are contained in such report. 3. Inspection of the Information shall take place in such manner and at such place and time as the parties may agree. The Information shall not be copied, duplicated, abstracted, summarized or recorded, directly or indirectly, by any means whatsoever, without the prior consent of Developer. 4. The Information shall remain the property of Developer, and any Information provided in tangible form shall be returned to Developer upon completion of such inspection. Any copies, duplications, abstracts, summaries or other recordings of the Information made with Developer's consent shall be returned to Developer upon demand. 5. Springsted agrees that any breach of the obligation of confidentiality imposed hereby shall constitute irreparable harm to Developer and shall entitle Developer to equitable relief enjoining any further breaches of this Agreement,together and in conjunction with any and all such other rernedies as may be available to Developer at law or in equity. IN WITNESS WHEREOF,the parties have hereunto set their hands the day and year first above written. DEVELOPER lis S INGSTED INC. By Its City of Elk lido Tax Increment Financing Policy&Application- 110USing Arnnded April 8 2015 Page 13eof 14 [�NATURE Thursday, January 26,2017 To Whom It may concern Elk River, MN 55330 Dear City, Briggs Properties,Inc is Pledging to work in good faith to complete this project under said timeline in Tiffapplication attached: The applicant also pledges in good faith to commit to the terms below upon a Successful Tiff Application of a 40 unit Market Rate Apartment Buildinlo,, FACILITY ONE: Amount-. $4,800,OWOO Purpose: ""lean loan on Multifamily New Construction Mini Perm Term: 3 year term,25 year amortization Collateral: I" Real Estate Mortgage on the following properties. 1) xxx 6' Street NW River, MN 55330 Pricing: TBD Guarantees: Business guaranty of Briggs Properties, Inc. Closings Costs: TBD THE TERMS AND CONDITIONS OF THE TRANSACTION ARE SUBJECT TO, BUT NOT LIMITED TO THOSE OUTLINED IN THIS LETTER. THOSE MATTERS THAT ARE NOT COVERED BY OR MADE CLEAR IN THIS OUTLINE ARE SUBJECT TO MUTUAL AGREEMENT, THIS TRANSACTION HAS BEEN APPROVED BY THE BOARD OF DIRECTORS, I hope that you will find that the terms and timeline outlined herein will meet with your approval, Please call me at 763-633-1080 to discuss the proposal, Thank you for allowing us the opportunity to present this proposal. Sincerely, I Patrxck Briggs President i Ll r u k � I 1 1i y 4 1 h uiw yM � ir �. ;. r 3,� 1 ° , n � w q f qw yp cA , N. b 1, t , .................. oa � r t"A ! , F C4 xo . 4 "MAP, - c 10 V.040 N XA !.x � l NI 916 �Ir IM IC al ca ca tn � . 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Cd km ✓_ w,. " a. .r , rs. 4 t �- waaICS3NNIW 83NH 33 I � 1A� L06 VVId AJ1 GNV H ,� � JG0 �iJ . s r DMG IUf 9 133W S2 ddb C.3 ........... 0 Z CD Q M'E MO Uh MN NOV NC. `.,ori' x T n rn "T s r r1` 4 �. �1 I r I'v CK 5 U1 d _ r m ... r � �� c...a �_....m_� 00 I m r>. < —� wy i slob x _ EEv site I 0 MC 15 Cc 0 D t Z m t5 OC .0 05 > o (D s o 20 a 0 0 LlCL c "t g g E E c - o 5 E' co m cu rq C) co < (n U) V) V) U. V) u7 ua 0 co w w CL ISI �� I� ,� V�J� �l f, r��J aJ1� 11 ! � f(/rf/��r Ir I . II Ir aj m �� wor MN Statute 4691.174 Subd. 10. Definition of a Housing district. "Housing district" means a type of tax increment financing district which consists of a project,or a portion of a project, intended for occupancy, in part, by persons or families of low and moderate income, as defined in chapter 462A, Title ll of the National Housing Act of 1934, the National Housing Act of 1959, the United States Housing Act of 1937, as amended, Title V of the Housing Act of 1949, as amended, any other similar present or future federal, state, or municipal legislation, or the regulations promulgated under any of those acts, and that satisfies the requirements of section 469.1761. Housing project means a project, or a portion of a project, that meets all of the qualifications of a housing district under this subdivision, whether or not actually established as,a housing district. Housing districts are subject to various income limitations and! requirements for residential property. For owner occupied residential property, at least 95% of the housing units assisted with tif must be initially purchased and occupied by individuals whose family income is less than or equal to the applicable income requirements,, The income limits for owner-occupied' units are 100%to 115%as adjusted for family size, For residential rental property, the property must satisfy the income requirements for a qualified residential rental project and follow the, low-income tax credit guidelines. The income requirements include that at least 20% of the units must be restricted for persons or families at 50%of area median income or 40%of the units restricted at 60%of area median income. Tax increment is generally used for financing of extraordinary and qualifying improvements deemed necessary for a new development to occur. Land acquisition, demolition,, site improvements, public improvements and infrastructure, utilities and related soft costs are generally eligible project costs. Actual construction costs related to a housing project can also typically be financed by tax increment revenues. The term of a Housing District is 25 years after receipt of first increment, MN Statute 469.176 S,ubd. 4d. Spending Limitations for a Housing District Revenue derived from tax increment from a housing district must be, used solely to finance the cost of housing projects as defined in sections 469.174, subdivision 11, and 469.17'61. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the authority may be included in the cost of a housing project. a) LO cc Lc) oi 617 �cl� ,W cl'a ID f-- C) cL m ` LD C2 "o Lo Lr) Co -IT o3' E m Q t- LO r- 0 '7t 8 mlhw cSi c'4cw) ID � u-j mcwa c'i 0- cL a cD c-I cz cu 0 cN Cp � t2 al cl�) cli Ln W -, m �o cL u) co cV 4% tl- at c c� w r- E m t-- W) OD 0 cc, tD " Ln 'too ett oq az� LQ ll*� Vi at m m m �r -2 t2 cq c,4 ci o� 'j� cn TL uD Cj -'r 0 un 'C*04 to 10 In r co u'�c'4 c6 '4 -n' o' 40 R w� u) c'4 m m ur) cc cD Lo it 0 - ( CIL(R (5) 9 rR FZ to aft12 cc rt c' ca ' CL C14 llt W-4 W) CM as c g c� m to g cD R 0 ul co, ccti� C) c W m in llct vL -cat 0 L� (7) Iri 0i cl� a) m on w r- oo E2 clj cL co a (D c) �o I) cm (clort C> �r :w co oo L to r-_ C14 w cD cD c:� c,ro . c,c� c� ZZ , E cw" IcO=, IwD o cD E2 a) c,,i. . I . 0 NT oo m (Q OR Ln - c14 �2 c2p wm cE3 So LU E E cm c-4 z cc cm: 'm-- E o m a cr 6 U-) cp C3 0 X: u en Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul,MN 55101-2887 Sprin s '0 Tel: 651-223-3000 Fax: 651-223-3002 www.springsted.com MEMORANDUM TO: Amanda Othoudt, City of Elk River FROM: Mikaela Huot,Vice President/Consultant DATE: March 24, 2017 SUBJECT: Financial Feasibility/But for Analysis for Jackson Hill Residential Suites Housing Project The City of Elk River received an application for financial assistance through Tax Increment Financing (TIF)to assist with financing a portion of the development costs related to the construction of a 40-unit residential rental multi-family affordable housing project located in the City of Elk River. The developer, Jackson Hills Residential Suites, LLC, has requested tax increment assistance to finance a portion of the costs associated with development of the project and providing a portion of the units as affordable. The purpose of this memorandum is to provide a summary of Springsted's review of the development project costs and operating pro forma as provided by the developer in order to assist the City with making a determination if the project as proposed would be unlikely to proceed "but-for" the requested Tax Increment Financing (TIF)assistance, and also to determine the appropriate amount, if any, of public assistance. Background The developer submitted a request for TIF assistance with the purpose of using tax increment to finance costs associated with construction of the project. The developer has proposed construction of an approximate 40 unit multi-family housing project in which a portion of the units would be affordable. The Sherburne County Assessor has provided a new assessed value of the building to be approximately $3,310,000 upon completion which equates to a value per unit of$82,800 (land and building). The actual value may be subject to further review and final building details. Developer Request for Assistance Assistance has been requested for financing a portion of the costs associated with construction of the project. The developer has proposed the $6 million project will be funded by an estimated $700,000 of equity and $4.8 million of private financing with a financial gap of$500,000 as requested to be financed through TIF funds. The developer's Public Sector Advisors City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 2 submitted information provides that the request for assistance would be pay-as-you-financing as reimbursement for extraordinary development costs. Following review of the developer's application and in accordance with existing City policy regarding TIF Housing Districts, it has been determined the developer may be eligible to receive up to 65% of the requested amount of assistance. This equates to a revised amount of assistance of up to$325,000. The developer has indicated the receipt of City financial assistance is necessary for the project to proceed to finance a portion of the project costs. The developer's initial request for assistance ($500,000) is equal to approximately 8.3% of total project costs. The estimated revised amount based on City policy is equal to $325,000 and is approximately 5.4% of total project costs. See complete sources and uses below from the developer's supporting financial materials submitted to Springsted. These figures are slightly different from the original application with some adjustments made to the debt and equity amounts, as well as the revised TIF amount. Sources Amount Uses Amount Equity $1,018,197 Land Acquisition 400,000 Debt $4,656,803 Site Work 300,000 TIF $325,000 Construction 4,855,000 Architectural &Engineering 75,000 Legal Fees 10,000 Interest during Construction 130,000 Contingencies 230,000 Total $6,000,000 Total $6,000,000 Tax Increment Assumptions In order to estimate the amount of TIF revenues generated by the proposed project, certain assumptions were made based on the value of the project, construction schedule, and anticipated financing terms. • Total project area(2 parcel) 0 75-134-2303 (EMV of$61,100) 0 75-134-2305 (EMV of$233,700) o Base value of TIF District o Estimated original net tax capacity of$3,685 ■ Classified as residential rental class rate • Estimated total market value upon completion 0 40 units at$82,800/unit o Total estimated completed value: $3,310,000 o Based on Assessor review • Maximum term of housing district(26 total years) • Increment based on difference between existing land value and new land/building value • Construction commences in 2017 and is completed in 2018 City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 3 0 20%assessed in January of 2018 for taxes payable in 2019 0 100%assessed in January of 2019 for taxes payable in 2020 • Payable 2017 tax rates remain o City: 46.193% o County: 50.458% o School: 36.659% o Other: 4.509% o Total 137.819% • Class rates remain constant through term o Residential rental rate of 1.25% o Classification of existing property as rental • 0%annual market value inflator assumed • Present Value assumptions 0 4.5% discount rate ■ (current private financing rate) 0 2/1/18 present value date • Developer PayGO 0 90% pledged to developer 0 10% retained by City o Approximately 10.5 years Tax Increment Revenue Estimates The tax increment revenue estimates are based on collection of revenues for the full term of the district. Based on the assumptions outlined above, the projected tax increment revenues to be generated from the project are shown in the chart below. Actual revenues generated by the project will be based on realized assumptions. TIF District Scenario Total Gross Tax Increment(26 years) $1,351,985 City Retainage(10%) $135,206 Net Amount Available for Developer(90%) $1,216,779 Developer Requested Terms Estimated Principal Amount $325,000 Estimated Interest(at 4.5%)Amount $109,483 Estimated Total Payments over approximately 10.5 years $434,483 Estimated Surplus (use to be determined) $782,296 City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 4 It is important to note that the maximum term of a housing district is 25 years after receipt of first increment. The current assumptions would include providing 90% of the revenues to the developer with the City retaining 10%. Based on the developer qualifying for up to 65%of the requested amount, there are different ways that the deal could be structured should the City be interested in retaining a greater portion of the increment to finance other eligible affordable housing costs. The City could retain a greater percentage than 10% each year. This would result in the City retaining more increment on an annual basis but would also result in the term of assistance to the developer extending beyond the estimated 10.5 year term. Project Qualifications Housing districts are a type of tax increment financing district that consist of a project intended for occupancy, in part, by persons or families of low and moderate income. Low and moderate income is defined in federal, state, and municipal legislation. A project does not qualify if more than 20% of the square footage of buildings that receive assistance from tax increments consist of commercial, retail or other nonresidential use. In addition, housing districts are subject to various income limitations and requirements for residential property. For owner occupied residential property, 95%of the housing units must be initially purchased and occupied by individuals whose family income is less than or equal to the income requirements for qualified mortgage bond projects under section 143(f) of the Internal Revenue Code. For residential rental property, the property must satisfy the income requirements for a qualified residential rental project as defined in section 142(4)of the Internal Revenue Code which states the following: • at least 20%of the units will be occupied by persons or families with incomes no greater than 50% of county median income or • at least 40%of the units will be occupied by persons or families with incomes no greater than 60%of county median income. Tax increments derived from a housing district must be used solely to finance the cost of housing projects as defined in section 469.174, subd. II and 469.176 of the TIF Act. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the City may be included in the cost of a housing project. The City anticipates using tax increment revenues to finance a portion of the extraordinary costs associated with providing the affordable housing units. Developer Pro forma But-For Analysis In approving a TIF district and project, the City must make several findings, including the "but for" test: that the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The developer has provided financial information showing that the operating cash flow requires financial assistance from the City to reduce the amount of debt and equity necessary to finance total project costs, as provided through the annual tax increment revenues from the project, and provide a reasonable return on investment. The developer has stated the assistance is necessary due to the high costs of developing the City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 5 site and inability of the project to support those costs upon completion. The current estimated project costs are in excess of the estimated future value of the building upon development as provided by the Sherburne County Assessor. Based on the developer's stated position relative to the need for tax increment financing assistance, the City could make its"but for"finding and provide tax increment assistance. We recommend, however, that the City also consider an appropriate level and type of TIF assistance for the project based on the information submitted by the developer. The City's position relative to the use of tax increment will focus on financing of the extraordinary costs. The level of assistance is in part dictated by the `extraordinary' costs of the project. Initial discussions about the project indicate the assistance would be provided as reimbursement to assist the developer with extraordinary costs associated with the development of affordable housing in the community. Following thorough evaluation of the project as provided allows the City to be prepared to make an informed "but-for" decision based on the likelihood of the project needing assistance, as well as the appropriate level of assistance. The "but-for" test is used to determine whether a project is likely to proceed as proposed without the use of public dollars. To complete this analysis we reviewed the developer's provided operating proforma and also constructed similar ten-year project proformas, showing a result if the developer received the assistance as pay-as-you-go (reimbursement for TIF eligible costs)and showing a result if the developer did not receive assistance. Our analysis of the proformas included a review of the development budget, projected operating revenues and expenditures, and the project's capacity to support annual debt service on the first mortgage and any secondary notes. To understand potential returns realized by the developer, with and without assistance, we utilized the project cost and operating information provided by the developer to generate the ten-year operating proformas and calculate estimated performance of the project. The purpose of evaluating the operating proformas is to understand the potential returns to the developer through the initial development of the project and the operation of the enterprise over a period of time.A 10-year period may not be indicative of the developer's intended investment period. Generally, should the rates of return lie below a reasonable range without assistance; we could assume the project as proposed would not move forward without assistance. Should the returns lie within a reasonable range with the assistance, we could assume the amount of assistance tested is appropriate for the project. All such estimates should be viewed as general indicators of performance and not exact forecasts. The number of current and future variables affecting these estimates and actual results are great. There are no set rate of return benchmarks that dictates whether a project needs TIF assistance or not; however there are market/industry standards for certain types of projects,as well as more specific investor/developer thresholds that need to be achieved. An additional measure of project feasibility is the Debt Coverage Ratio (DCR), which is a calculation detailing the ratio by which operating income exceeds the debt-service payments for the project. If the DCR is greater than 1.0 it indicates the project has operating income that is greater than the debt-service payment by some margin; conversely if the DCR is less than 1.0 it indicates the project is incapable of meeting its debt-service payment and would need to City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 6 seek additional revenue sources in order to pay its debt. Typical lending standards will require a DCR of significantly greater than 1.0 as a measure of cushion in the event actual revenues and expenses are different than projected. Based on the provided information, financial assistance from the City will be necessary to provide sufficient annual cash flow to meet those minimum coverage requirements. Without assistance, the annual coverage is projected to be just at 1x upon project stabilization. Our review of the various operating proformas based on with assistance as paygo and, alternatively, with no assistance, provides a range of projected returns to the developer and are illustrated in the table below. It is important to note that certain assumptions were made based on the developer's provided information including the debt and equity amounts, lease rates for the apartments, vacancy rates and annual revenue and operating expense inflators in order to analyze the projected returns to the developer and overall project performance. Changes to those assumptions may have a significant impact on the actual performance of the project. The table below represents the projected returns to the developer and debt service ratios utilizing the developer's provided financial information including sources and uses of funds and operating proforma. Projected Performance Metrics With Assistance Without Assistance Internal Rate of Return 12.52% 4.84% Debt Service Coverage 1.16x 1.01xx Based on the information provided and the calculated returns and coverage, we assume without assistance the project would be infeasible due to the low debt service coverage. With assistance it is projected to provide a reasonable internal rate of return which may indicate that a reduction in assistance due to the application review is possible to stay within reasonable ranges. *calculated using stabilized net operating income and net project costs financed by the developer Prosect Financinq There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as- you-go basis. With upfront financing, the City would finance a portion of the developer's initial project costs through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 7 payments and would have to use other sources to fill any shortfall of tax increment revenues. With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment revenues are not sufficient. The developer's financial information includes pay-as-you-go financing. Conclusion The developer has requested financial assistance of approximately$500,000 as related to construction of the 40-unit multi-family affordable housing project. Assistance has been requested as pay-as-you-go financing (supported solely by tax increments generated from this project). City policy guidelines have indicated the maximum amount the developer could be eligible for is 65%of the total request to equal a revised amount of$325,000. Through the submission of the tax increment financing application and supporting financial information, the developer has indicated that the project as proposed would not occur on the current site without financial assistance from the City due to the below-market returns and low debt coverage metrics projected to be generated by the project. Based on the current assumptions, without assistance the project as proposed would not be considered feasible. With assistance the project is expected to generate returns that the developer has indicated are sufficient to allow the project to proceed. An overall reduction in project costs and/or increase in revenues may assist with achieving greater market feasibility in the future. The City may also choose to perform a post-development cost audit to determine actual costs as opposed to projected (and thus driving the need for public assistance) to determine if the recommended amount of assistance is appropriate. Based on the projected performance of the project with assistance, it appears the City will have an opportunity to reduce the amount of assistance while still meeting the developer's needs. Without assistance, the debt coverage ratio is 1x and below typical lender standards. Providing annual cash flow assistance will allow the project to achieve market debt coverage ratios, thus allowing the project to proceed. It is important to note the project as proposed is providing affordable housing units within the City. By establishing a Housing TIF District, the developer is agreeing to maintain a portion of the units as affordable (meeting the income requirements as outlined previously) over the life of district. Without tax increment assistance the developer is not required to maintain any affordable units. Due to the projected infeasibility of the project based on current assumptions, absent additional revenue source(s)to meet minimum coverage thresholds, we assume the developer would increase the rents without assistance, reduce the scope of the project to reduce costs or not proceed with the project, or some combination. Based on the provided financing assumptions, there is a financing gap resulting from providing a portion of the units as affordable and some sort of financial assistance would be necessary to support a portion of the extraordinary project costs and meet minimum return thresholds that would allow the project as proposed to proceed. To support this conclusion and as illustrated in the analysis outlined above, the projected debt coverage ratios and rates of City of Elk River, Minnesota But For Analysis of Jackson Hills Residential Suites TIF Project March 24,2017 Page 8 return that the project as proposed is infeasible without some level of assistance absent changes to either the project cost assumptions, permanent debt assumptions and/or projected operating income. A reduction in the amount of assistance provided to the developer, resulting both from City objectives regarding public participation amounts and available increment, may require the developer to renegotiate the current acquisition price and/or look at other cost savings in the project. As shown in the estimated tax increment revenue section of this memorandum, there are projected to be surplus revenues available from this project that could be used to finance other eligible affordable housing projects within the City. Further discussion regarding how those surplus funds could be used, whether through a pooling program or on an annual basis, is recommended to occur. Thank you for the opportunity to be of assistance to the City of Elk River. Please contact me at 651.223.3036 or 651.368.2533 or mhuot agspringsted.com with any questions or comments. IX. WORKSHEET- HOUSING PROJECTS TO BE COMPLETED BY CITY STAFF The project must meet the criteria set forth in Section IV of the City's, Tax Increment Financing policy to continue. V/"a) Meets minitnuni thresholds for size, value, and tax revenue, 1415(x .....................lz" b) Meets at least carne of the objectives in Section 11 and satisfies all of the provisi<..)ns set forth 11.1 Section 111. c) Demonstrates need f(-,)r TIF with the bulfi)r anal),sis. d) Consistent with all city plans and ordinances. e) Serves at least two public purposes as defined in Section IV (f). ................. 1. Ratio of Private to All Public Investment in Project: Points. 7� C7 Greater than "'7:11 1- $ private investment 6:1 8 $ Public Investment 5:1 6 i Ratio Private: Public Financing 4:1 4 3:1 2 Less, than 3:1 1 2. Project provides housing that is restricted Points.- to persons 55 years and older: 1,0 3. Market Value/Tax Base Generation: Points.- Project will result in an estimated market value per unit $135,000JJnIt 5 ; /7� 03 410 (."K a4 (land and building�) of 21 $125,000/Urut 4 $115,000/Ur.tit 3 V-'J('H1'["' /1", $1 O5,000/Unit 2 $ 95,000/Urait I A F)- 4.Project proposes rehabilitation of existing housing, housing stock, and rn,aximizes utilization of existing infrastructure: Points:- k4 l fl 5. Project proposes a location neat existing jobs, transportation, recreation, retail services, social services, and schools: Points: 3 ry 6. Project includes community/ neighborhood: Points: facility (pool, community center, etc.) Points, based on scale ofimprovemerit (1-5) Yes 5 7. Type of Housing Project: Points: IW41 Owner Occupied Investment Property 8. Likelihood that the project will result in Points: unsubsidized, spin-off developtnent. I lig),. ) Moderate, 3 F)" V,vi o i� ("', Low I Sub - Total Points. Q of a possible 50 points. 9. Bonus Points Bonus Points: I'lle project Nvill not be 100% Pqy-rat-,yoa-,go TIE -5 points The project does not require modification to land use plan. '(;,�oints The project contributes to, the goals of Ener "oints y Product pv-mtotes sensible use of energy,OR Project utilizes significant energy of design &/or materials in construction. Total Points: 21— Overall project analysis: Rank Points Max eligible High 45-50 points 100%, Moderate 37-44 points 85% Low 30-_3&Pfajjjts 65% ot Eligible 0-29 points"'�) tAA A (d 4J c CL LU > w cr C-1,2 LAJ. � %0 1, z Lu (A IL 41 c 0 c j 4) (A 41 >LLJ 0 0 U. 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One is a 40-unit residential rental multi-family affordable housing project to be constructed by Jackson Hills Residential Suites, LLC. The other is a multi-phase project to be constructed by Elk River Lodge & Residential Suites, LLC. The second project would be constructed in multiple phases with the first phase including renovation of the Elk River Lodge building to include interior improvements, construction of a 25-unit garage and new parking lot. Future phases would include redevelopment of the former Saxon site into approximately 225 total units developed in three building phases. The developer of both sites has requested tax increment assistance to finance a portion of the costs associated with construction of the projects that includes redevelopment and renovation and providing a portion of the residential units as affordable. The purpose of this memorandum is to provide a summary of Springsted's review of the financials provided in conjunction with the applications for assistance and an update on the project status. The final review will be to assist the City with making a determination if the projects as proposed would be unlikely to proceed "but-for' the requested Tax Increment Financing (TIF) assistance, and also to determine the appropriate amount, if any, of public assistance. Background: Jackson Hill Residential Suites Housing Project The developer submitted a request for TIF assistance related to the proposed construction of an approximate 40 unit multi-family housing project in which a portion of the units would be affordable. The Sherburne County Assessor provided a new assessed value of the building to be approximately $3,310,000 (land and building). Assistance has been requested for financing a portion of the costs associated with construction of the project. The developer has proposed the$6 million project will be funded by an estimated $700,000 of equity and $4.8 million of private financing with a financial gap of $500,000 as requested to be financed through TIF funds. The developer's submitted information provides that the request for assistance would be pay-as-you-financing as reimbursement for Public Sector Advisors City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 2 extraordinary development costs. The developer has indicated the receipt of City financial assistance is necessary for the project to proceed to finance a portion of the project costs. The developer's initial request for assistance ($500,000)is equal to approximately 8.3% of total project costs. Under the current application and rating criteria, the project may be eligible to receive up to 65% of the requested amount, which would be equal to $325,000. The projections provided in the analysis are based on the current application guidelines. See complete sources and uses below from the developer's supporting financial materials submitted to Springsted. These figures are slightly different from the original application with some adjustments made to the debt and equity amounts, as well as the revised TIF amount. Sources Amount Uses Amount Equity $1,018,197 Land Acquisition 400,000 Debt $4,656,803 Site Work 300,000 TIF $325,000 Construction 4,855,000 Architectural &Engineering 75,000 Legal Fees 10,000 Interest during Construction 130,000 Contingencies 230,000 Total $6,000,000 Total $6,000,000 There was some discussion at the last EDA Finance Committee regarding the size of the proposed district (one or two properties)and related acquisition price. The acquisition price included in the project sources and uses is for the 1.76 acre parcel that will comprise the 40-unit housing project. For clarification purposes, the applicant is in the process of revising the application and supporting materials to reflect this. Any future phases of development will be reviewed separately. Springsted provided some preliminary sensitivity analysis and adjusted the acquisition price to understand what impact a reduced purchase price may have on the overall feasibility of the project. Reducing the existing purchase price from $5.21/square foot to something less is expected to have a positive impact on the performance of the project. It could ultimately reduce the amount of assistance necessary but is not expected to eliminate the need for assistance. Tax Increment Revenue Estimates The tax increment revenue estimates are based on collection of revenues for the full term of the district. Based on the assumptions previously outlined, the projected tax increment revenues to be generated from the project are shown in the chart below. Actual revenues generated by the project will be based on realized assumptions. City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 3 Jackson Hills Residential Suites Housing Project TIF District Scenario Total Gross Tax Increment(26 years) $1,351,985 City Retainage(10%) $135,206 Net Amount Available for Project(s)(90%) $1,216,779 Developer Requested Terms Estimated Principal Amount $325,000 Estimated Interest(at 4.5%)Amount $109,483 Estimated Total Payments over approximately 10.5 years $434,483 Estimated Surplus (use to be determined) $782,296 It is important to note that the maximum term of a housing district is 25 years after receipt of first increment. The current assumptions would include providing 90% of the revenues to the developer with the City retaining 10%. Based on the developer qualifying for up to 65%of the requested amount, there are different ways that the deal could be structured should the City be interested in retaining a greater portion of the increment to finance other eligible affordable housing costs. The City could retain a greater percentage than 10% each year. This would result in the City retaining more increment on an annual basis but would also result in the term of assistance to the developer extending beyond the estimated 10.5 year term. Under the current assumptions, and as illustrated in the table above, the City could expect surplus revenues from the district in an estimated amount of$782,296. Background: Elk River Lodge and Residential Suites Redevelopment Project The developer submitted a request for TIF assistance related to the proposed renovation and redevelopment of the existing Elk River Lodge site and former Saxon site as one redevelopment district. The developer has currently provided financial information related to the first phase of the project which would include interior and exterior improvements to the existing Elk River Lodge building, construction of a 25-unit garage and new parking lot. Additional information on the future phases of development on the former Saxon site are anticipated to be provided shortly and are anticipated to include three residential market-rate apartment buildings. The developer has estimated the cost of the improvements for the first phase to be approximately $437,050 and financed with a combination of debt and equity through an existing mortgage refinancing including new proceeds to finance the identified improvements; and that assistance would be necessary to meet annual cash flow requirements on an ongoing basis of the operating proforma once the building is improved. The developer's submitted information provides that the request for assistance would be pay-as-you-financing as reimbursement for extraordinary development costs. The developer has also indicated that a portion of the units would be considered `affordable' and meet the definition of a housing project to be eligible to receive tax increment City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 4 assistance. Based on initial review of the project components, it does not appear that the first phase would generate increments sufficient to support the request for assistance. It is the developer's intent that increment generated from the new developments on the former Saxon site would be included to assist with financing of the entire combined redevelopment project. Further information on this concept will be provided at the next EDA Finance Committee meeting following receipt of the developer's additional financial information related to the future phases of residential development on the former Saxon site. Project Financinq There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay-as- you-go basis. With upfront financing, the City would finance a portion of the developer's initial project costs through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service payments and would have to use other sources to fill any shortfall of tax increment revenues. With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment revenues are not sufficient. The developer's financial information for both applications includes pay-as-you-go financing as annual reimbursement. The City also has the ability to spend tax increments from a tax increment financing district on other eligible projects within the City. The type, location and amount of eligible projects that can be financed is subject to the district(s) from which the tax increments would be spent from. This spending is referred to as `pooling' of tax increments. Revenues from a housing district may be spent anywhere within the City as long as the project that is being financed meets the statutory definition of a housing project. Revenues from a redevelopment district may be spent within the boundaries of a project area, subject to certain percentage limitations and timing restrictions. Based on the tax increment revenue analysis provided in the chart above, it is anticipated that should the Jackson Hills Residential Suites project proceed, there may be surplus revenues available that could be spent on other eligible housing projects. An example of this may include the improvements to the Elk River Lodge site, as well as any other affordable housing projects that may be identified within the City. Policy Application The City's existing policy and application for tax increment financing assistance is under review by the EDA, EDA Finance Committee, HRA and City Council. Under the existing policy and application, the Jackson Hills Residential Suites proposed project may be eligible for assistance of up to 65% of the requested amount. It is the applicant's City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 5 desire to hold review of the current application for the Jackson Hills project until a revised policy is approved, anticipating any potential changes to the existing review thresholds and benchmark indicators. The Elk River Lodge and Residential Suites proposed project would also consist entirely of residential. As a result, the applicant would also like to delay review of the application until a revised policy and application is considered and approved. In addition, as indicated previously in the memorandum, additional information is anticipated to be received on the entire project for the Elk River Lodge and former Saxon site that would include all phases of development. This will assist in providing a greater understanding of the overall project,financing and policy review. Developer Pro forma But-For Analysis In approving a TIF district and project, the City must make several findings, including the "but for" test: that the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The developer has provided financial information showing that the operating cash flow requires financial assistance from the City to reduce the amount of debt and equity necessary to finance total project costs, as provided through the annual tax increment revenues from the project, and provide a reasonable return on investment. The developer has stated the assistance is necessary due to the high costs of developing the site and inability of the project to support those costs upon completion. Based on the developer's stated position relative to the need for tax increment financing assistance, the City could make its "but for' finding and provide tax increment assistance. We recommend, however, that the City also consider an appropriate level and type of TIF assistance for the project based on the information submitted by the developer. The City's position relative to the use of tax increment will focus on financing of the extraordinary costs. The level of assistance is in part dictated by the`extraordinary' costs of the project. Initial discussions about the project indicate the assistance would be provided as reimbursement to assist the developer with extraordinary costs associated with the development of affordable housing in the community. Following thorough evaluation of the project as provided allows the City to be prepared to make an informed "but-for' decision based on the likelihood of the project needing assistance, as well as the appropriate level of assistance. The "but-for" test is used to determine whether a project is likely to proceed as proposed without the use of public dollars. To complete this analysis we reviewed the developer's provided operating proforma and also constructed similar ten-year project proformas, showing a result if the developer received the assistance as pay-as-you-go (reimbursement for TIF eligible costs)and showing a result if the developer did not receive assistance. Our analysis of the proformas included a review of the development budget, projected operating revenues and expenditures, and the project's capacity to support annual debt service on the first mortgage and any secondary notes. Conclusion The City has received two applications for tax increment financing assistance. Both projects involve the construction of multi-family housing, with some affordability components. The first application related to construction of a 40-unit multi-family affordable housing project and related financial analysis has been reviewed by City staff and the EDA City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 6 Finance Committee. Existing City policy guidelines have indicated the maximum amount the developer could be eligible for is 65% of the total request of $500,000 to equal a maximum amount of $325,000. Through the submission of the tax increment financing application and supporting financial information, the developer has indicated that the project as proposed would not occur on the current site without financial assistance from the City due to the below-market returns and low debt coverage metrics projected to be generated by the project. Based on the current assumptions, without assistance the project as proposed would not be considered feasible. With assistance the project is expected to generate returns that the developer has indicated are sufficient to allow the project to proceed. An overall reduction in project costs and/or increase in revenues may assist with achieving greater market feasibility in the future. The developer has indicated an amount greater than 65% of the request is necessary for the project to proceed. The second application includes both the existing Elk River Lodge and former Saxon sites. The developer has proposed the renovation of the existing Elk River Lodge to include internal and external improvements, construction of 25-unit garage and new parking lot. Future phases of development include redevelopment of the former Saxon site into a 3-building approximate 225-unit (each building with 75 units) multi-family residential project. The developer has provided financial information related to the first phase of renovating the existing Elk River Lodge indicating that financial assistance is necessary to provide annual cash flow and meet required debt coverage ratios and market returns. Because both projects proposed to be constructed comprise of housing and the City is in the process of reviewing and potentially updating the existing tax increment financing policy and application, the developer has requested review of the applications be delayed until the next EDA Finance Committee meeting in May. Therefore, additional information related to the financial analysis of both projects will be provided at that meeting. The Committee has already reviewed the Jackson Hills Residential Suites project based on the existing policy. Any updates based on changes to the policy and application will be provided. Initial analysis relating to the Elk River Lodge and Residential Suites proposed project will also be provided, including financial feasibility and but-for review. Both projects as proposed would include a provision of affordable housing units within the City. By establishing a Housing TIF District for the Jackson Hills Residential Suites project, the developer would be agreeing to maintain a portion of the units as affordable (meeting the income requirements as outlined previously) over the life of district. Without tax increment assistance the developer is not required to maintain any affordable units. As shown in the estimated tax increment revenue section of this memorandum, there are projected to be surplus revenues available from the Jackson Hills Residential Suites project that could be used to finance other eligible affordable housing projects within the City. Further discussion regarding how those surplus funds could be used, whether through a pooling program or on an annual basis, is recommended to occur. Attachments:Proiect Qualifications:Definition of Housing and Redevelopment Districts City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 7 Project Qualifications: Definition of Housing and Redevelopment Districts Housing districts are a type of tax increment financing district that consist of a project intended for occupancy, in part, by persons or families of low and moderate income. Low and moderate income is defined in federal, state, and municipal legislation. A project does not qualify if more than 20% of the square footage of buildings that receive assistance from tax increments consist of commercial, retail or other nonresidential use. In addition, housing districts are subject to various income limitations and requirements for residential property. For owner occupied residential property, 95%of the housing units must be initially purchased and occupied by individuals whose family income is less than or equal to the income requirements for qualified mortgage bond projects under section 143(f) of the Internal Revenue Code. For residential rental property, the property must satisfy the income requirements for a qualified residential rental project as defined in section 142(4)of the Internal Revenue Code which states the following: • at least 20%of the units will be occupied by persons or families with incomes no greater than 50% of county median income or • at least 40% of the units will be occupied by persons or families with incomes no greater than 60%of county median income. Tax increments derived from a housing district must be used solely to finance the cost of housing projects as defined in section 469.174, subd. II and 469.176 of the TIF Act. The cost of public improvements directly related to the housing projects and the allocated administrative expenses of the City may be included in the cost of a housing project. The City anticipates using tax increment revenues to finance a portion of the extraordinary costs associated with providing the affordable housing units. The term of a Housing District is 25 years after receipt of first increment. Redevelopment districts are tax increment financing districts consisting of a project, or portions of a project, within which is found by resolution that one or more of the following conditions, reasonably distributed throughout the district, exists: (1) parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance; (2) the property consists of vacant, unused, underused, inappropriately used, or infrequently used rail yards, rail storage facilities, or excessive or vacated railroad rights-of-way; (3) tank facilities, or property whose immediately previous use was for tank facilities, as defined in section 115C.02, subdivision 15, if the tank facilities: City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 8 (i) have or had a capacity of more than 1,000,000 gallons; (ii)are located adjacent to rail facilities; and (iii) have been removed or are unused, underused, inappropriately used, or infrequently used; or (4)a qualifying disaster area,as defined in subdivision 10b. For purposes of this subdivision, "structurally substandard" shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The municipality may find that a building is not disqualified as structurally substandard under the preceding sentence on the basis of reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. The municipality may not make such a determination without an interior inspection of the property, but need not have an independent, expert appraisal prepared of the cost of repair and rehabilitation of the building. An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard. Items of evidence that support such a conclusion include recent fire or police inspections, on-site property tax appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence. Written documentation of the findings and reasons why an interior inspection was not conducted must be made and retained. Failure of a building to be disqualified under the provisions of this paragraph is a necessary, but not a sufficient, condition to determining that the building is substandard. A parcel is deemed to be occupied by a structurally substandard building for purposes of the finding under paragraph (a)or by the improvements described in paragraph(e)if all of the following conditions are met: (1)the parcel was occupied by a substandard building or met the requirements of paragraph(e), as the case may be, within three years of the filing of the request for certification of the parcel as part of the district with the county auditor; (2) the substandard building or the improvements described in paragraph (e) were demolished or removed by the authority or the demolition or removal was financed by the authority or was done by a developer under a development agreement with the authority; (3) the authority found by resolution before the demolition or removal that the parcel was occupied by a structurally substandard building or met the requirements of paragraph (e) and that after demolition and clearance the authority intended to include the parcel within a district; and City of Elk River, Minnesota Tax Increment Applications for Proposed Jackson Hill Residential Suites Housing Project and Elk River Lodge and Residential Suites, LLC April 25,2017 Page 9 (4) upon filing the request for certification of the tax capacity of the parcel as part of a district, the authority notifies the county auditor that the original tax capacity of the parcel must be adjusted as provided by section 469.177, subdivision 1, paragraph (f). For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots, or other similar structures unless 15 percent of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots, or other similar structures. For districts consisting of two or more noncontiguous areas,each area must qualify as a redevelopment district under paragraph (a)to be included in the district, and the entire area of the district must satisfy paragraph(a). At least 90 percent of the revenues derived from tax increments from a redevelopment district or renewal and renovation district must be used to finance the cost of correcting conditions that allow designation of redevelopment and renewal and renovation districts under section 469.174. These costs include, but are not limited to, acquiring properties containing structurally substandard buildings or improvements or hazardous substances, pollution, or contaminants, acquiring adjacent parcels necessary to provide a site of sufficient size to permit development, demolition and rehabilitation of structures, clearing of the land, the removal of hazardous substances or remediation necessary to development of the land, and installation of utilities, roads, sidewalks, and parking facilities for the site. The allocated administrative expenses of the authority, including the cost of preparation of the development action response plan, may be included in the qualifying costs. The term of a Redevelopment District is 25 years after receipt of first increment. City of Elk River, Minnesota Creation of a Tax Increment Financing Plan for Tax Increment Financing(Housing)District No, (Jackson Hills Residential Suites Proposed Housing Project) Proposed Schedule of Events Date Event Responsible Party Evaluate Developer information and drafting of TIF Plan City, Kennedy& Graven, Ongoing Spring 2017 Determine project area status—creation and/or modification as necessary Springsted Review planning process requirements, Proposed Establishment of TIF Plan and TIF District and Development Program and Development District Saturday, Publication of notice of Planning Commission meeting on land use City March 15 applicaflons in Star News Tuesday, March 28,2017 EDA Finance Committee reviews TIF Housing application City, Kennedy&Graven, at 7:30arn Springsted .......... ............... Tuesday, March 28,2017 Planning Commission reviews and considers land use applications City at 7pm Monday,April 3, 2017 City Council calls for public hearing (optional) City, Kennedy&Graven, at 6:30pm Springsted Monday,April 17, 2017' at bpm or soon after EDA City,Council reviews and considers land use,applications City meeting Thursday, County Commissioner receives notification letter Springsted April 20, 2017 (at least 30 days prior to publication of notice of public hearing) Tuesday, City Planning Commission reviews draft TIF plan and Development Program City, Kennedy&Graven April 25, 2017 at 7pm Friday, County and School District receive impact letters&draft TIF plan for Springsted May 5,2017 TI F(Housing) District (at least 30 days prior to public hearing) Saturday, Publication of notice of public hearing in Star News Springsted May 20,2017 (10-30 days prior to public hearing) Monday, June 5 Housing and Redevelopment Authority reviews TlF Plan and TI:F District and at 5:30p,m Development Program and Development District and provides ................. recommendation to City Council Monday, City Council holds public hearing, and considers resolution establishing TiF City, Kennedy&Graven, June 5, 2017 at 6:30pm Plan and TIF District and Development Program and Development District Springsted Monday, City Council reviews and considers Development Agreement City, Kennedy&Graven, June 5, 2017 at 6:30pm iSpringsted After June 5 State filing and request for County certification Springsted j City of Elk River,Minnesota Creation of a Tax Increment Financing Plan for Tax Increment Financing(Housing)District No. (Jackson Hills(Residential Suites Proposed Housing Project) Proposed Schedule of E'venfs Date Event Responsible Party Evaluate Developer information and drafting of TIF Plan City, Kennedy& graven, Ongoing Spring 2017 Determine project area status—creation and/or modification as necessary Springsted Review planning process requirements Proposed Establishment of TIF Plan and TIF District and'Cevelopiment Program and Development Diistrict Saturday, Publication of notice of Planning Commission meeting on land use March 15 applications in Star News City Tuesday, March 23, 2017 EDA f=inance Committee reviews TIF Housing application City, Kennedy&Graven, t 7:30arn Springsted Tuesday, March 26,2017 Planning Commission reviews and considers land use applications City at 7pm Monday,April 3, 2017 City Council calls for public hearing(optional) 'City, Kennedy&Graven, at 6:30pm Springsted Monday„April 17,2017 at bpm or soon after EDA City Council reviews and considers land use applications City meetin Thursday, County Commissioner receives notification letter April 20, 2017 (at least 30,days prior to publication of notice of public bearing) Springsted Tuesday, City Planning Commission reviews draft TIF plan and Development Program 'City, Kennedy&Graven April 25, 2017 at 7pm Friday, County and School District receive impact betters&draft TIF plan for Springsted May 5,2017 TIF(Housing) District (at least 30 days prior to public hearing) Saturday, Publication of notice of public hearing in Star News Springsted May 20,20'17 (10-30 days prior to public hearing) Monday, June 5 Housing and Redevelopment Authority reviews TIF Plan and TIF District and at 5:30pm Development Program and Development District and provides recommendation to Ci Council ..— — ........._. Monday, City Council holds public hearing, and considers resolution establishing TIF City, Kennedy&Graven, June 5,2017 at 6.30pm Plan and TIF District and Development Program and Development District Springsted Monday, City Council reviews and considers Development Agreement City, Kennedy&Graven, June 5,2017 at�6:30pm Springsted After June 5 State filing and request for County certification Springsted Edd Co een From: Othoudt, Amanda Sent: Wednesday, April 19, 2017 2,30 PPVI To: Eddy, Colleen Subject: FW: Update on TIF Applicabons Amanda Othoudt, EDFP Economic Development Director 8 City of Elk River Direct 753,535.1 042 Cell: 763.218.2766 13065 Orono Parkway EWk River I IVIN 155330 Elk" r eNATURE SI , , From: Pat Briggs [maHtoq)atg�p (&thebriqqsc rrn _p,�IriJesxo Sent: Wednesday, April 19, 2017 2:29 PM To: Othoudt, Amanda Cc., Mikaella Huot Subject: RE: Update on 7IF Applications H(,d�o Amanda, Fhat as correU, however we dcSCLISSed being at the rneerinn next m.-,�ek to update the group or) the ieOsed pkin to ens(ire we are aon the swTJE page as we proceed PB From. Othoucit,Amanda [r-nailto:A0thou0 J R ve-M teE k i i R Sent: Wednesday,April 19, 2017 10:10 AM To: Pat Briggs <pAtL@LhtLr > Subject: Update on TIF Applications Pat-- I spa; kc to Mikaela this inorning. She indicated that you would Idw to postpone the review of diuj.icksort [tills and to the May 30"' VD,� FC 111ceting. (',In }'Okl Pl.CaSC C(Alfirlll this Via Clllail� City of Elk River,Minnesota Creation of a Tax Increment Financing Plan for Tax Increment Financing(Redevelopment)District No. (Elk River Lodge and Residential Suites Proposed Project) Ptopos,eo $06- d',ule, Ewellt$ Date Event Responsible Party Evaluate Developer information and drafting of TIF Plan City, Kennedy & Graven, Ongoing Spring 2017 Determine project area status—creation and/or modification as necessary Springsted Review ppanning process requirements Establishment of TIF Plan andTIF District Publication of notice of Planning Commission meeting on land use City applications in 8tar'News , Monday,April 3, 2017 Application and Supporting Financial Materials Received from Applicant Developer Preliminary initial determination of substandard buildings)made on all buildings within Redevelopment District Tuesday,April 25,2017 EDA Finance Committee reviews TNF Redevelopment application City, Kennedy&Graven, at 7:30arn Springsted Planning Commission reviews and considers land use applications City I — ' 'Monday, May 1,2017 City Council calls for public hearing(optional) Springsted City, Kennedy&Graven,' City Council reviews and considers land use applications, Cfty Monday, County Commissioner receives notification letter Springsted May 15,2017 (at least 30 days prior to publication of notice of public hearing) Tuesday, City Planning Commission reviews draft TIF plan and Development Program City, Kennedy&Graven May 23,2017 Friday, County and School District receive impact letters&draft TIF plan for Springsted June 2, 2017 TIF(Redevelopment)District (at least 30 days prior to public hearing) Saturday, PuNication of notice of public hearing in Star News Springsted June 17, 2017 (1'0-30 days prior to public hearing) Monday,June 5 Housing and Redevelopment Authority reviews TIF Plan and TIF District and City, Kennedy&Graven, at 5:30pm Development Program and Development District and provides Springsted recommendation to Cit Council Monday, City Council holds public hearing, and considers resolution establishing TIF City, Kennedy&Graven, July 3,2017 Plan and TIF District and Development Program and Development District Springsted Monday, City Council reviews and considers Development Agreement City, Kennedy&Graven, July 3,2017 Springsted After July 3 State filing and request for County certification Springsted