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HomeMy WebLinkAbout7A - Creekside Plaza ; MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: -^'-- ---",' CITY COUNCIL AGENDA REPORT DECEMBER 17, 2001 7A DONALD RYE, PLANNING DIRECTOR CONSIDER APPROVAL OF RESOLUTION ADOPTING THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.3 AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 1 WITHIN DEVELOPMENT DISTRICT 3 AND ADOPTING THE TAX INCREMENT FINANCING PLAN THEREFOR History On October 15th, 2001, the City Council adopted a resolution approving in concept the use of tax increment financing (TIF) to assist in the development of a senior housing facility on Five Hawks Avenue. The project, called Creekside Estates, will contain 54 rental units for seniors 55 years of age and older. Twenty per cent or 11 of the units are to be made available to persons earning 50% of the County median income and the rents for these units are to be consistent with the ability to pay i.e. rents not to exceed 30% of annual income. On November 5, 2001, the Council adopted a resolution ordering the creation of Development District 3, TIF District 3-1 and the preparation of a TIF Plan for the project. In addition, the Council set a public hearing date of December 171h to hear comments on the Plan. A public hearing is required by statute before a TIF District can be created and a TIF Plan adopted. The County Commissioner and the School District have received a notice of the public hearing and a copy of the TIF Plan. A copy of the TIF Plan and the Development Program for Development District 3 is attached. Current Circumstances The applicants have estimated the total market value of the project to be $4,150,000. The TIF Plan has assumed an mIDual gross tax increment of $62,026 and a net increment of $55,482. The applicants have requested assistance not to exceed $675,000 in their initial application. The cash flow analysis indicates the present value of the assistance will be $516,246 over a 20- year period. 162000j[~sN~lEr~~'ke~~~~~I:;~r~g~ Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER . Scott County has reviewed this request and the County staff recommended the request be denied unless the applicant revises the rents for the 11 units to $653 per month which is considered affordable under Housing and Urban Development and Minnesota Housing Finance Agency standards for persons earning 50% or less of the median income in the County. The applicants have agreed to a reduction in rents for the 11 units affected for the life of the TIF District. The County has taken the position that the. rents for the 11 units should be no more than 30% of the income of a person making 50% of the County median income or $653 per month for a one bedroom apartment. At their December 11 meeting, the County Board expressed concern that the rent structure for the unsubsidized units had increased. They asked what evidence we have that the higher rents would be marketable. Stonegate Apartments, which are currently under construction, indicates their rent structure will be comparable. The applicant has confirmed through their consultant that the rent structure is appropriate for the Metropolitan area. Sid Inman of Ehlers concurs. In the end, the Board voted unanimously to approve the TIP program. Issues The TIF application raises a number of issues. The Council is aware that 11 of the dwelling units are reserved for qualified income tenants. The rent structure to be used are as established by HOD and MHF A. The rents will be certified annually to the City and must meet the HUD/MHF A standard for the duration of the TIF District, or 20 years. The question is whether this is satisfactory to the City Council. To establish the subsidized rents, the applicant adjusted the other rents upwards but it appears the actual rates are comparable to other rent structures. Over the 20-year life span of the TIF District, the City will administer the District and will collect 10% of the TIP revenues to reimburse itself for the associated expenses. Unlike the Lakefront Plaza project, the City will not be completing any public improvements to benefit this proj ect. The project is consistent with the Council's objective to provide low to moderate cost housing to seniors. This project will do so for 20 years. Conclusion The staff believes this project is consistent with the City Council's policy of providing economical senior citizen housing. If the Council adopts the attached resolution, the next step will be the preparation of a development agreement for approval by the Council that will memorialize the terms and conditions of the TIP project. L:\01 files\Ol eda\ccreport3-1 ] 231701 .doc 2 ALTERNATIVES: RECOMMENDED MOTION: REVIEWED BY: 1. Adopt the attached resolution as proposed or with amendments 2. Take no action Alternative 1. L:\Olfiles\Oleda\ccreport3-1123170Ldoc 3 ;p 0 All Counties Page 35 of 44 ~lty: ..fective Date: 04/06/2001 EXHIBIT B County: Saint Louis Effective Date: 04/061200 1 Median Income(AMI): $49,800 _____ Income Limits By Household Size ------ 2 3 4 5 6 7 8 30% 10,470 11',940 13,440 14.940 16.140 17.340 18.540 19,710 35% 12.215 13,930 15,680 17.430 18,830 20.230 21.630 22.995 40% 13.960 15,920 17,920 19,920 21,520 23,120 24,720 26,280 45% 15.705 17.910 20,160 22.410 24,210 26,010 27,810 29,565 50% 17.450 19,900 22.400 24,900 26,900 28.900 30,900 32,850 55% 19.195 21.890 24,640 27.390 29.590 31.790 33,990 36,135 60% 20,940 23,880 26,880 29,880 32.280 34,680 37,080 39,420 _ Maximum Gross Rents By Household Size(Pre 1990)- __ Maximum Gross Rents By Bedroom Size(Post 1989) - 2 3 4 5 6 7 8 0 2 3 4 5 6 30% 261 298 336 373 403 433 463 492 261 280 336 388 433 478 522 35% 305 348 392 435 470 505 540 574 305 326 392 453 505 557 610 40% 349 398 448 498 538 578 618 657 349 373 448 518 578 637 697 45% 392 447 504 560 605 650 695 739 392 420 504 582 650 717 784 50% 436 497 560 622 672 722 772 821 436 466 560 647 722 796 871 55% 479 547 616 684 739 794 849 903 479 513 616 712 794 876 958 60% 523 597 672 747 807 867 927 985 523 560 672 m 867 956 1,045 County: Scott Effective Date: 0410612001 Median Income(AMl): $74,700 _______ Income Limits By Household Size ---- 2 3 4 5 6 7 8 30% 15,690 17,940 20,160 22,410 24,210 ~6.010 27,780 29.580 35% 18,305 20.930 23,520 26,145 28.245 30,345 32,410 34,510 40% 20,920 23,920 26,880 29,880 32.280 34,680 37,040 39.440 45% 23,535 26,910 30,240 33,615 36,315 39,015 41,670 44,370 50% 26,150 29,900 33,600 37.350 40,350 43,350 46,300 49,300 55% 28,765 32,890 36.960 41.085 44,385 47,685 50,930 54.230 60% 31,380 35,880 40,320 44,820 48,420 52,020 55,560 59,160 __ Maximum Gross Rents By Household Size(Pre 1990) .-- ____ Maximum Gross Rents By Bedroom Size(Post 1989) -.- 2 3 4 5 6 7 8 0 2 3 4 5 6 30% 392 448 504 560 60S 650 694 739 392 420 504 582 650 717 784 35% 457 523 588 653 706 758 810 862 457 490 588 679 758 836 915 40% 523 598 672 747 807 867 926 986 523 560 672 777 867 956 1,045 45% 588 672 756 840 907 975 1.041 1,109 588 630 756 874 975 1.075 1.176 ~ 50% 653 747 840 933 1,008 1,083 1.157 1,232 653 700 840 971 1,083 1,195 1.307 55% 719 822 924 1,027 1,109 1.192 1,273 1,355 719 770 924 1,068 1.192 1,314 1,437 60% 784 897 1.008 1,120 1,210 1.300 1.389 1,479 784 840 1,008 1.165 1.300 1,434 1,568 . TAX_CREDIT _INCOME_LIMn. RDF SCOTT COUNTY GOVERNMENT CENTER TAXATION DEPARTMENT 200 FOURTH AVENUE WEST SHAKOPEE, MINNESOTA 55379-1220 (952) 496-8115 Fax: (952) 496-8135 larnoldi@co.scott.mn.us http://www.co.scott.mn.us LEROY T. ARNOLDI DEPARTMENT OF TAXATION, DIRECTOR December 12,2001 Prior Lake City Council Prior Lake City Administrator 16200 Eagle Creek Ave Prior Lake, MN 55372 Dear City Council & City Administrator: On December 11,2001, the Scott County Board of Commissioners was given a presentation on the Proposed TIF District #3-1, Creekside Senior Housing Development. County Staff was seeking approval of the Scott County Board of Commissioners comments that are to be a part of the public meeting, scheduled for Monday, December 17th, 2001. After reviewing the plan of the proposed district, the Scott County Board of Commissioners, County Administration, and County staff would like to formally make the following determination and recommendation. The County agrees that the district qualifies as a housing district by statute. The need for senior housing in Scott County, and statewide, is immediate. Scott County supports developments that provide housing for the seniors while maintaining the issue of affordability. After receiving a new rent schedule, along with the modified proforma, and the endorsement of the Scott County HRA, the Scott County Board of Commissioners would like to inform Prior Lake City Council and City Administrator that they have unanimously voted to support this project. Scott County feels that the development will address the housing needs of the senior community and is in support of the adoption of Tax Increment Financing #3-1, known as the Creekside Senior Housing Development. On behalf of the Scott County Board of Commissioners, ~lL~ Leroy T. Arnoldi Taxation Director Cc: Commissioner Bannerman, Chair Commissioner Marschall, Vice-Chair Commissioner Ulrich Commissioner Bohnsack Commissioner Wagner David Unmacht, Scott County Administrator All Equal Opportunity/Safety Aware Employer 0 All Counties Page 35 of 44 ....~ty: ..fective Date: 04/06/2001 EXHIBIT B County: Saint Louis Effective Date: 0410612001 Median Income(AMI): $49,800 ____ Income Umits By Household Size --- 2 3 4 5 6 7 8 30% 10.470 11',940 13.440 14.940 16.140 17.340 18,540 19,710 35% 12.215 13,930 15.680 17.430 18,830 20.230 21,630 22.995 40% 13,960 15,920 17,920 19,920 21,520 23,120 24,720 26.280 45% 15.705 17.910 20.160 22.410 24.210 26,010 27,810 29,565 50'10 17.450 19,900 22.400 24,900 26,900 28.900 30,900 32.850 55% 19,195 21.890 24.640 27.390 29,590 31,790 33.990 36.135 60% 20.940 23.880 26,880 29.880 32,280 34,680 37.080 39,420 _ Maximum Gross Rents By Household Size(Pre 1990)- __ Maximum Gross Rents By Bedroom Size(post 1989)- 2 3 4 5 6 7 8 0 1 2 3 4 5 6 30% 261 298 336 373 403 433 463 492 261 280 336 388 433 478 522 35'10 305 348 392 435 470 505 540 574 305 326 392 453 50S 557 610 40'10 349 398 448 498 538 578 618 657 349 373 448 518 578 637 697 45% 392 447 504 560 605 650 695 739 392 420 504 582 650 717 784 50'10 436 497 560 622 672 722 772 821 436 466 560 647 722 796 871 55% 479 547 616 684 739 794 849 903 479 513 616 712 794 876 958 60% 523 597 672 747 807 867 927 985 523 560 672 m 867 956 1,045 County: Scott Effective Date: 0410612001 Median Income(AMl): $74,700 _____ Income Limits By Household Size -- 2 3 4 5 6 7 8 30% 15.690 17,940 20,160 22,410 24,210 ~6.010 27,780 29.580 35% 18.305 20.930 23,520 26,145 28,245 30.345 32.410 34,510 40% 20.920 23,920 26.880 29,880 32.280 34,680 37,040 39,440 45% 23,535 26.910 30,240 33,615 36,315 39,015 41.670 44,370 50% 26.150 29,900 33.600 37.350 40.350 43.350 46.300 49.300 55% 28.765 32,890 36.960 41.085 44,385 47,685 50.930 54.230 60% 31.380 35,880 40,320 44,820 48,420 52.020 55.560 59,160 _ Maximum Gross Rents By Household Size(Pre 1990) --- ___ Maximum Gross Rents By Bedroom Size(Post 1989)- 2 3 4 5 6 7 8 0 1 2 3 4 5 6 30'10 392 448 504 560 605 650 694 739 392 420 504 582 650 717 784 35'10 457 523 588 653 706 758 810 862 457 490 588 679 758 836 915 40'10 523 598 672 747 807 867 926 986 523 560 672 777 867 956 1.045 45'10 588 672 756 840 907 975 1.041 1.109 588 630 756 874 975 1.075 1.176 ~ 50% 653 747 840 933 1,008 1.083 1.157 1.232 653 700 840 971 1,083 1.195 1.307 55% 719 822 924 1,027 1.109 1,192 1,273 1.355 719 770 924 1.068 1.192 1,314 1,437 60% 784 897 1,008 1,120 1,210 1.300 1.389 1.479 784 840 1,008 1.165 1.300 \,434 1.568 TAX_CREDIT _INCOME_LIMn. RDF SCOTT COUNTY GOVERNMENT CENTER TAXATION DEPARTMENT 200 FOURTH AVENUE WEST SHAKOPEE, MINNESOTA 55379-1220 (952) 496-8115 Fax: (952) 496-8135 larnoldi@co.scotLmn.us http://www.co.scott.mn.us LEROY T. ARNOLDI DEPARTMENT OF TAXATION, DIRECTOR December 12, 2001 Prior Lake City Council Prior Lake City Administrator 16200 Eagle Creek Ave Prior Lake, MN 55372 Dear City Council & City Administrator: On December 11,2001, the Scott County Board of Commissioners was given a presentation on the Proposed TIF District #3-1, Creekside Senior Housing Development. County Staff was seeking approval of the Scott County Board of Commissioners comments that are to be a part ofthe public meeting, scheduled for Monday, December 17th, 2001. After reviewing the plan of the proposed district, the Scott County Board of Commissioners, County Administration, and County staff would like to formally make the following determination and recommendation. The County agrees that the district qualifies as a housing district by statute. The need for senior housing in Scott County, and statewide, is immediate. Scott County supports developments that provide housing for the seniors while maintaining the issue of affordability. After receiving a new rent schedule, along with the modified proforma, and the endorsement of the Scott County HRA, the Scott County Board of Commissioners would like to inform Prior Lake City Council and City Administrator that they have unanimously voted to support this project. Scott County feels that the development will address the housing needs of the senior community and is in support of the adoption of Tax Increment Financing #3-1, known as the Creekside Senior Housing Development. On behalf of the Scott County Board of Commissioners, 4;]: &M'+~ Leroy T. Arnoldi Taxation Director Cc: Commissioner Bannerman, Chair Commissioner Marschall, Vice-Chair Commissioner Ulrich Commissioner Bohnsack Commissioner Wagner David Unmacht, Scott County Administrator An Equal Opportunity/Safety Aware Employer !3r RESOLUTION NO. 01/ JP/~~ RESOLUTION ADOPTING THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO.3; AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO. 1 WITHIN DEVELOPMENT DISTRICT NO. 3 AND ADOPTING THE TAX INCREMENT FINANCING PLAN THEREFOR. BE IT RESOLVED by the City Council (the "Council") of the City of Prior Lake, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. The City Council (the "Council") of the City of Prior Lake (the "City") has proposed that the City establish Development District No.3 and adopt the Development Program therefor and establish Tax Increment Financing District No. 3-1 (the "District") therein, and adopt the Tax Increment Financing Plan therefor (collectively, the "Program and Plan"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, 469.124 through 469.134 and 469.174 through 469.179, all inclusive, as amended, (the "Act") all as reflected in the Program and Plan, and presented for the Council's consideration. 1.02. The City has investigated the facts relating to the Program and Plan and has caused the Program and Plan to be prepared. 1.03. The City has performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Program and Plan, including, but not limited to, notification of Scott County and Independent School District No. 719 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Program and Plan by the City Planning Commission, and the holding of a public hearing upon published notice as required by law. 1.04. Certain written reports (the "Reports") relating to the Program and Plan and to the activities contemplated therein have heretofore been prepared by staff and submitted to the Council and/or made a part of the City files and proceedings on the Program and Plan. The Reports include data, information and/or substantiation constituting or relating to the bases for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein. Section 2. Findings for the Adoption and Approval of the Program and Plan. 2.01. The Council hereby finds that the Program and Plan, are intended and, in the judgment of this Council, the effect of such actions will be, to provide an impetus for development in the public purpose and accomplish certain objectives as specified in the Program and Plan, which are hereby incorporated herein. Section 3. Findings for the Establishment of Tax Increment Financing District No.3-I. 3.01. The Council hereby finds that Tax Increment Financing District No. 3-1 is in the public interest and is a "housing district" under Minnesota Statutes, Section 469.174, Subd. 11. 3.02. The Council further finds that the proposed development would not occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Tax Increment Financing Plan, that the Program and Plan conform to the general plan for the development or redevelopment of the City as a whole; and that the Program and Plan will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise. 3.03. The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. Section 4. Public Purpose 4.01. The adoption of the Program and Plan conforms in all respects to the requirements of the Act and will help fulfill a need to develop an area of the City which is already built up, to provide housing opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. Section 5. Approval and Adoption of the Program and Plan. 5.01. The Program and Plan, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the City Clerk. 5.02. The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Program and Plan and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose. 5.03 The Auditor of Scott County is requested to certify the original net tax capacity of the District, as described in the Program and Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City of Prior Lake is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution. 5.04. The City Manager is further authorized and directed to file a copy of the Program and Plan with the Commissioner of Revenue. Passed and adopted this 17th day of December, 2001 YES NO MADER MADER GUNDLACH GUNDLACH ERICSON ERICSON PETERSEN PETERSEN ZIESKA ZIESKA Frank Boyles, City Manager (Seal) EXHIBIT A RESOLUTION # The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No.3-I, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No. 3-1 is a housing district as defined in M.S., Section 469.174, Subd. lJ. Tax Increment Financing District No. 3-1 consists of one parcel. The development will consist of rental housing. At least 20 percent of the unitslhomes receiving assistance will have incomes at or below 50 percent of statewide median income. The market value of non-assisted housing or commercial property will be less than 20 percent of the total fair market value of the planned improvements. At least 20 percent of the units/homes receiving assistance wi1J have rents according to tbe attached schedule (See Exhihit B). Appendix E of the TIF plan contains detailed analysis for the above finding. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of Tax Increment Financing District No. 3-1 permitted by the Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the development proposed in this plan is a housing that meets the City's objectives for development and redevelopment. The cost site and public improvements and utilities makes this housing development infeasible without City assistance. Due to the high cost of building affordable new housing in the City and the cost of financing the proposed public improvements, this project is feasible only through assistance, in part, from tax increment financing. The developer was asked for and provided a proforma as justification that the developer would not have gone forward without tax increment assistance (see attachment in Appendix F of the TIF plan). The increased market value of the site that could reasonable be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the Plan: The City supported this finding on the grounds that the cost of site and public improvements and utilities add to the total development cost. Historically, site development costs in this area have made development infeasible without tax increment assistance. Therefore, the City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the District, the total increase in market value would be up to $4,135,000. The present value of tax increments from the District is estimated to be $643,095. Tbc developer may receive a maximum of $517.000 of the tax increment assistance. It is the Council's finding that no development with a market value of greater than $3,491,905 would occur without tax increment assistance in this district within 25 years. This finding is based upon evidence from general past experience with the high cost of site improvements and public improvements in the general area of the District (see Cashflow in Appendix D of the TIP plan). 3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the Plan and found that the Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No.3 by private enterprise. Through the implementation of the Plan, the City will provide an impetus for residential development, desirable or necessary for increased population with the City. TAX INCREMENT FINANCING PLAN for the establishment of TAX INCREMENT FINANCING DISTRICT NO. 3-1 (a housing district) within DEVELOPMENT DISTRICT NO.3 CITY OF PRIOR LAKE SCOTT COUNTY STATE OF MINNESOTA Public Hearing: December 17,2001 Adopted: e EHLERS & ASSOCIATES INC Prepared by: EHLERS & ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113-1105 651-697-8500 fax: 651-697-8555 www.ehlers-inc.com TABLE OF CONTENTS (for reference purposes only) SECTION II TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 3-1 ..................................................... 2-1 Subsection 2-1. Foreword.............................................. 2-1 Subsection 2-2. Statutory Authority ....................................... 2-1 Subsection 2-3. Statement of Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 Subsection 2-4. Development Program Overview ............................ 2-1 Subsection 2-5. Description of Property in the District and Property To Be Acquired . 2-1 Subsection 2-6. Classification of the District ................................ 2-2 Subsection 2-7. Duration of the District .................................... 2-2 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Valuellncrement and Notification of Prior Planned Improvements ............... 2-3 Subsection 2-9. Sources of Revenue/Bonded Indebtedness. . . . . . . . . . . . . . . . . . . . 2-4 Subsection 2-10. Uses of Funds .......................................... 2-4 Subsection 2-11. State Tax Increment Financing Aid (Local Contribution) . . . . . . . . . . . 2-5 Subsection 2-12. Fiscal Disparities Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-5 Subsection 2-13. Business Subsidies ...................................... 2-5 Subsection 2-14. County Road Costs ...................................... 2-6 Subsection 2-15. Estimated Impact on Other Taxing Jurisdictions. . . . . . . . . . . . . . . . . 2-7 Subsection 2-16. Supporting Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7 Subsection 2-17. Definition of Tax Increment Revenues ........................ 2-7 Subsection 2-18. Modifications to the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8 Subsection 2-19. Administrative Expenses .................................. 2-8 Subsection 2-20. Limitation of Increment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9 Subsection 2-21. Use of Tax Increment.. ..... ......... ., . ........ ......... 2-10 Subsection 2-22. Excess Tax Increments .................................. 2-11 Subsection 2-23. Requirements for Agreements with the Developer . . . . . . . . . . . . .. 2-11 Subsection 2-24. Assessment Agreements ........ . . . . . . . . . . . . . . . . . . . . . . . .. 2-11 Subsection 2-25. Administration of the District. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-12 Subsection 2-26. Annual Disclosure Requirements . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-12 Subsection 2-27. Reasonable Expectations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2-12 Subsection 2-28. Other Limitations on the Use of Tax Increment ................ 2-12 Subsection 2-29. Summary ............................................. 2-13 APPENDIX A - PROJECT DESCRIPTION ...................................... A-1 APPENDIX B - MAP OF DEVELOPMENT DISTRICT NO.3 AND TIF DISTRICT NO. 3-1 . . B-1 APPENDIX C - DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT ... C-1 APPENDIX D - ESTIMATED CASH FLOW FOR THE DiSTRiCT....... . .. . ... . ...... D-1 APPENDIX E - HOUSING QUALIFICATIONS FOR THE DISTRICT.. ...... .... .. .... E-1 APPENDIX F - BUT/FOR QUALIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 --">_ ,,,,,~,w,,,,,,,,__,~,,,,._,,_,,,,,_,~__,__.^~_~__~_,~~,,,_,...........~, ,,' "W'" .n...___",._..,...__..,,,,.._"~._M'~_"~'_""'_"'_____-_.~~-_.~-~ SECTION /I TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 3-1 Subsection 2-1. Foreword The City of Prior Lake (the "City") staff and consultants have prepared the following information to expedite the establishment of Tax Increment Financing District No. 3-1 ("the District"), a housing tax increment financing district, located in Development District No.3. Subsection 2-2. Statutory Authority Within the City, there exist areas where public involvement is necessary to cause development or redevelopment to occur. To this end, the City has certain statutory powers pursuant to Minnesota Statutes ("MS. "), 469.124 through 469.134, inclusive, as amended, and MS., Sections 469.174 through 469.179, inclusive, as amended (the "Tax Increment Financing Act" or "TIF Act"), to assist in financing public costs related to this project. This Section contains the Tax Increment Financing Plan (the "Plan") for Tax Increment Financing District No.3-I. Other relevant information is contained in the Development Program for Development District No. 3. Subsection 2-3. Statement of Objectives The District currently consists of one parcel of land and adjacent and internal rights-of-way. The District is being created to facilitate construction of approximately 54 units of senior rental housing in the City of Prior Lake. Contracts for this have not been entered into at the time of preparation of this Plan, but the date when development is likely to occur is Fall 2001. This Plan is expected to achieve many of the objectives outlined in the Development Program for Development District No.3. The activities contemplated in the Development Program and the Plan do not preclude the undertaking of other qualified development or redevelopment activities. These activities are anticipated to occur over the life of Development District No.3 and the District. Subsection 2-4. Development Program Overview 1. Relocation - Relocation services, to the extent required by law, are available pursuant to MS., Chapter 117 and other relevant state and federal laws. Subsection 2-5. Description of Property in the District and Property To Be Acquired The District encompasses all property and adjacent rights-of-way identified by the parcel listed below. See the map in Appendix B for further information .on the location of the District. Parcel Number 25-378-003-0 City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 2-1 Subsection 2-6. Classification of the District The City, in determining the need to create a tax increment financing district in accordance with MS., Sections 469.174 to 469.179, as amended, inclusive, finds that the District, to be established, is a housing district pursuantto MS., Section 469.174, Subd 11 and MS., Section 273.1399, Subd. 1 (c) as defined below: Minnesota Statutes, Section 469.174, Subdivision II: "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 II 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. A district does not qualify as a housing district under this subdivision if the fair market value of the improvements which are constructed in the district for commercial uses or for uses other than low and moderate income housing consists of more than 20 percent of the total fair market value of the planned improvements in the development plan or agreement. The fair market value of the improvements may be determined using the cost of construction, capitalized income, or other appropriate method of estimating market value. Housing project means a project, or portion of a project, that meets all the qualifications of a housing district under this subdivision, whether or not actually established as a housing district. In meeting the statutory criteria the City relies on the following facts and findings: o The District consists of one parcel o The development will consist of 54 units of rental townhomes/apartments o 20% of the units will be occupied by persons with incomes less than 50% ofthe area median income. o The market value of non-assisted housing or commercial property will be less than 20% of the total fair market value of the planned improvements. (See Appendix E). Pursuant to 469.176 Subd 7, the District does not contain any parcel or part of a parcel that qualified under the provisions of Section 273.111 or 273.112 of Chapter 473Hfortaxes payable in any of the five calendar years before the filing of the request for certification of the District. The City reserves the right to impose additional or alternative income restrictions, as permitted by law, for housing districts. Subsection 2-7. Duration of the District Pursuant to MS., Section 469.175, Subd 1, and Section 469.176, Subd 1, the duration of the District must be indicated within the Plan. Pursuant to MS., Section 469.176, Subd 1 b, the duration of the District will be 25 years after receipt of the first increment by the City (a total of26 years). The date of receipt by the City of the first tax. increment is expected to be 2004. Thus, it is estimated that the District, including any modifications of the Plan for subsequent phases or other changes, would terminate after 2029, or when the Plan is satisfied. If increment is received in 2003, the term of the District will be 2028. The City reserves the right to decertify the District prior to the legally required date. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 2-2 Subsection 2-8. Original Tax Capacity, Tax Rate and Estimated Captured Net Tax Capacity Valuellncrement and Notification of Prior Planned Improvements Pursuantto MS., Section 469.174, Subd. 7 and MS., Section 469.177, Subd. 1, the Original Net Tax Capacity (ONTC) as certified for the District will be based on the market values placed on the property by the assessor in 2001 for taxes payable 2002. Pursuant to MS., Section 469.177, Subds. 1 and 2, the County Auditor shall certify in each year (beginning in the payment year 2003) the amount by which the original value has increased or decreased as a result of: 1. change in tax exempt status of property; 2. reduction or enlargement of the geographic boundaries of the district; 3. change due to adjustments, negotiated or court-ordered abatements; 4. change in the use of the property and classification; 5. change in state law governing class rates; or 6. change in previously issued building permits. In any year in which the current Net Tax Capacity (NTC) value of the District declines below the ONTC, no value will be captured and no tax increment will be payable to the City. The original local tax rate for the District will be the local tax rate for taxes payable 2002, assuming the request for certification is made before June 30, 2002. The Original Tax Capacity and the Original Local Tax Rate for the District appear in the table on the next page. Pursuant to MS., Section 469.174 Subd. 4 and MS., Section 469.177, Subd 1, 2, and 4, the estimated Captured Net Tax Capacity (CTC) of the District, within Development District No.3, upon completion of the project, will annually approximate tax increment revenues as shown in the table below. The City requests 100 percent of the available increase in tax capacity for repayment of its obligations and current expenditures, beginning in the tax year payable 2003. The Project Tax Capacity (PTC) listed is an estimate of values when the project is completed. Project Estimated Tax Capacity upon Completion (PTC) Original Estimated Net Tax Capacity(ONTC) Estimated Captured Tax Capacity (CTC) Original Local Tax Rate 51,875 188 Estimated Annual Tax Increment(CTC x Local Tax Rate) Percent Retained by the City 51,687 1.20000 Pay 2002 est. 62,02' 100% Pursuant to MS., Section 469.177, Subd. 4, the City shall, after a due and diligent search, accompany its request for certification to the County Auditor or its notice of the District enlargement pursuant to MS., Section 469.175, Subd 4, with a listing of all properties within the District or area of enlargement for which building permits have been issued during the eighteen (18) months immediately preceding approval of the Plan by the municipality pursuant to MS., Section 469.175, Subd. 3. The County Auditor shall increase the City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District NO.3-I 2-3 original net tax capacity of the District by the net tax capacity of improvements for which a building penn it was issued. The City has reviewed the area to be included in the District and determined that no building permits have been issued during the 18 months immediately preceding approval of the Plan by the City. Subsection 2-9. Sources of Revenue/Bonded Indebtedness Public improvement costs, utilities, parking facilities, streets and sidewalks, and site preparation costs and other costs outlined in the Uses of Funds will be financed primarily through the annual collection of tax increments. The City reserves the right to use other sources of revenue legally applicable to the City and the Plan, including, but not limited to, special assessments, general property taxes, state aid for road maintenance and construction, proceeds from the sale of land, other contributions from the developer and investment income, to pay for the estimated public costs. The City reserves the right to incur bonded indebtedness or other indebtedness as a result of the Plan. As presently proposed, the project will be financed by a pay-as-you-go note and interfund loan or transfer. Additional indebtedness may be required to finance other authorized activities. The total principal amount of bonded indebtedness or other indebtedness related to the use of tax increment financing will not exceed $731,000 plus interest without a modification to the Plan pursuant to applicable statutory requirements. This provision does not obligate the City to incur debt. The City will issue bonds or incur other debt only upon the detennination that such action is in the best interest of the City. The City may also finance the ac- tivities to be undertaken pursuant to the Plan through loans from funds of the City or to reimburse the developer on a "pay-as-you-go" basis for eligible costs paid for by a developer. The estimated sources of funds for the District are contained in the table below. SOURCES OF FUNDS TOTAL $1,600,000 $1,600,000 Tax Increment PROJECT REVENUES Interfund loans from the City or other districts may be used to cover project expenses of Tax Increment District No.3-I. It is the City's intention to pay back the interfund loans with tax increment from District No.3-I. Subsection 2-10. Uses of Funds Currently under consideration for the District is a proposal to facilitate construction of approximately 54 units of senior housing. The City has detennined that it will be necessary to provide assistance to the project for certain costs. The City has studied the feasibility of the development or redevelopment of property in and around the District. To facilitate the establishment and development or redevelopment of the District, this Plan authorizes the use of tax increment financing to pay for the cost of certain eligible expenses. The estimate of public costs and uses of funds associated with the District is outlined in the table on the following page. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No, 3-1 2-4 USES OF FUNDS TOTAL Site ImprovementslPreparation F ooting/F oundation/Structural Work Landscaping Lighting for Parking Lot SAC/WAC Sprinkler System Public Utilities Parking Facilities Streets and Sidewalks Interest Administrative Costs (up to 10%) $93,000 $333,500 $40,000 $6,000 $30,500 $10,000 $6,000 $38,000 $14,000 $869,000 $160,000 $1.600.000 PROJECT COSTS TOTAL Estimated costs associated with the District are subject to change among categories without a modification to this Plan. The cost of all activities to be considered for tax increment financing will not exceed, without fonnal modification, the budget above pursuant to the applicable statutory requirements. The City may expend funds for qualified housing activities outside of the District boundaries. Subsection 2-11. State Tax Increment Financing Aid (Local Contribution> The 2001 Legislature eliminated the provisions for a reduction in state tax increment financing aid (RlSTIF A) or the alternative qualifying local contribution. If required by future legislation, it is the City's intention to consider taking the steps necessary to preserve state-paid local government aid. Subsection 2-12. Fiscal Disparities Election It is not anticipated that the District will contain commercial/industrial property. Therefore, the fiscal disparities provision does not apply to the District. If commercial/industrial property is included in the District, the contribution will be paid from inside the District. Subsection 2-13. Business Subsidies Pursuant to MS. Statutes 116J.993, Subdivision 3, the following fonns of financial assistance are not considered a business subsidy: (I) a business subsidy ofless than $25,000; (2) assistance that is generally available to all businesses or to a general class of similar businesses, such as a line of business, size, location, or similar general criteria; (3) public improvements to buildings or lands owned by the state or local government that serve a public purpose and do not principally benefit a single business or defined group of businesses at the time the improvements are made; City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 2-5 (4) redevelopment property polluted by contaminants as defined in section lI6J.552, subdivision 3; (5) assistance provided for the sole purpose of renovating old or decaying building stock or bringing it up to code and assistance provided for designated historic preservation districts, provided that the assistance is equal to or less than 50% of the total cost; (6) assistance to provide job readiness and training services if the sole purpose of the assistance is to provide those services; (7) assistance for housing; (8) assistance for pollution control or abatement, including assistance for a tax increment financing hazardous substance subdistrict as defined under 469.174, subdivision 23; (9) assistance for energy conservation; (10) tax reductions resulting from conformity with federal tax law; (11) workers' compensation and unemployment compensation; (12) benefits derived from regulation; (13) indirect benefits derived from assistance to educational institutions; (14) funds from bonds allocated under chapter 474A, bonds issued to refund outstanding bonds, and bonds issued for the benefit of an organization described in section 501 (c) (3) of the Internal Revenue Code of 1.986, as amended through December 31, 1999; (15) assistance for a collaboration between a Minnesota higher education institution and a business; (16) assistance for a tax increment financing soils condition district as defined under section 469.174, subdivision 19; (17) redevelopment when the recipient's investment in the purchase of the site and in site preparation is 70 percent or more ofthe assessor's current year's estimated market value; (18) general changes in tax increment financing law and other general tax law changes of a principally technical nature. (19) Federal assistance until the assistance has been repaid to, and reinvested by, the state or local government agency; (20) Funds from dock and wharf bonds issued by a seaway port authority; (21) Business loans and loan guarantees of $75,000 or less; and (22) Federal loan funds provided through the United States Department of Commerce, Economic Development Administration. The City is not providing tax increment financing for the purpose of economic development or job growth and therefore the provisions of MS., Section 116J.993 to 116J.994, which states that a local unit of government granting financial assistance to a business for economic development or job growth purposes, including tax increment financing, must establish business subsidy criteria and approve a business subsidy agreement with the business receiving the assistance, do not apply. Subsection 2-14. County Road Costs Pursuant to MS., Section 469. J 75, Subd. J G, the county board may require the City to pay for all or part of the cost of county road improvements if the proposed development to be assisted by tax increment will, in the judgement of the county, substantially increase the use of county roads requiring construction of road improvements or other road costs and if the road improvements are not scheduled within the next five years under a capital improvement plan or within five years under another county plan. In the opinion ofthe City and consultants, the proposed development outlined in this Plan will have little or no impact upon county roads. If the county elects to use increments to improve county roads, it must notify the City within forty-five days of receipt of this Plan. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No.3-I 2-6 Subsection 2-15. Estimated Impact on Other Taxing Jurisdictions The estimated impact on other taxingjurisdictions assumes that the redevelopment contemplated by the Plan would occur without the creation of the District. However, the City has determined that such development or redevelopment would not occur "but for" tax increment financing and that, therefore, the fiscal impact on other taxing jurisdictions is $0. The estimated fiscal impact of the District would be as follows if the "but for" test was not met: IMPACT ON TAX BASE Scott County City of Prior Lake Prior Lake ISD No. 719 2001/2002 est. Total Net Tax Capacity 64,152,757 10,930,196 10,930,196 Estimated Captured Tax Capacity (CTC) Upon Completion 51,687 51,687 51,687 Percent of CTC to Entity Total 0.0806% 0.4729% 0.4729% IMPACT ON TAX RATES Scott County City of Prior Lake Prior Lake ISD No. 719 Other Total 2001/2002 est. Percent Potential Extension Rates of Total CTC Taxes 0.401650 33.47% 51,687 20,760 0.397440 33.12% 51,687 20,542 0.316620 26.39% 51,687 16,365 0.084290 7.02% 51.687 4.357 1.200000 100.00% 62,024 The estimates listed above display the captured tax capacity when all construction is completed. The tax rate used for calculations is the estimated 2001 /Pay 2002 rate. The total net capacity for the entities listed above are based on estimated Pay 2002 figures. The District will be certified under the actual 200 I /Pay 2002 rates. Subsection 2-16. Supporting Documentation Pursuant to MS. Section 469.175 Subd 1 a, clause 7 the Plan must contain identification and description of studies and analyses used to make the determination set forth in MS. Section 469.175 Subd 3, clause (2). Following is a list of reports and studies on file at the City that support the authority's findings: · Tax Increment Financing Application Subsection 2-17. Definition of Tax Increment Revenues Pursuant to MS., Section 469.174, Subd. 25, tax increment revenues derived from a tax increment financing district include all of the following potential revenue sources: City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No.3-I 2-7 1. taxes paid by the captured net tax capacity, but excluding any excess taxes, as computed under MS., Section 469.177; 2. the proceeds from the sale or lease of property, tangible or intangible, purchased by the authority with tax increments; 3. repayments of loans or other advances made by the authority with tax increments; and 4. interest or other investment earnings on or from tax increments. Subsection 2-18. Modifications to the District In accordance with MS, Section 469.175, Subd. 4, any: 1. reduction or enlargement of the geographic area of Development District No.3 or the District; 2. increase in amount of bonded indebtedness to be incurred, including a determination to capitalize interest on debt if that determination was not a part of the original plan, or to increase or decrease the amount of interest on the debt to be capitalized; 3. increase in the portion ofthe captured net tax capacity to be retained by the City; 4. increase in total estimated tax increment expenditures; or 5. designation of additional property to be acquired by the City, shall be approved upon the notice and after the discussion, public hearing and findings required for approval of the original Plan. Pursuant to MS. Section 469.175 Subd. 4(b), the geographic area of the District may be reduced, but shall not be enlarged after five years following the date of certification of the original net tax capacity by the county auditor. If a qualified housing district is enlarged, the reasons and supporting facts for the determination that the addition to the district meets the criteria of MS, Section 469.174, Subd. 11 and MS, Section 273.1399, Subd. l(c) must be documented. The requirements of this paragraph do not apply if(l) the only modification is elimination ofparcel(s) from Development District No. 3 or the District and (2) (A) the current net tax capacity of the parcel( s) eliminated from the District equals or exceeds the net tax capacity ofthose parcel(s) in the District's original net tax capacity or (B) the City agrees that, notwithstanding MS., Section 469.177, Subd. 1, the original net tax capacity will be reduced by no more than the current net tax capacity of the parcel(s) eliminated from the District. The City must notify the County Auditor of any modification that reduces or enlarges the geographic area of Development District No. 3 or the District. Modifications to the District in the form of a budget modification or an expansion of the boundaries will be recorded in the Plan. Subsection 2-19. Administrative Expenses In accordance with MS., Section 469.174, Subd. 14, and MS, Section 469.176, Subd. 3, administrative expenses means all expenditures of the City, other than: 1. amounts paid for the purchase of land; 2. amounts paid to contractors or others providing materials and services, including architectural and engineering services, directly connected with the physical development of the real property in the project; 3. relocation benefits paid to or services provided for persons residing or businesses located in the project; or City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No.3-I 2-8 4. amounts used to pay principal or interest on, fund a reserve for, or sell at a discount bonds issued pursuant to MS, Section 469.178; or 5. amounts used to pay other financial obligations to the extent those obligations were used to finance costs described in sections 1 to 3. For districts for which the request for certification were made before August 1, 1979, or after June 30, 1982, administrative expenses also include amounts paid for services provided by bond counsel, fiscal consultants, and planning or economic development consultants. Tax increment may be used to pay any autborized and documented administrative expenses for the District up to but not to exceed 10 percent of the total tax increment expenditures authorized by the Plan or the total tax increment expenditures for Development District No.3, whichever is less. Pursuant to MS., Section 469.176, Subd 4h, tax increments may be used to pay for the county's actual administrative expenses incurred in connection with the District. The county may require payment of those expenses by February 15 of the year following the year the expenses were incurred. Pursuant to MS., Section 469. 177, Subd 11, the county treasurer shall deduct an amount equal to 0.25 percent of any increment distributed to the City and the county treasurer shall pay the amount deducted to the state treasurer for deposit in the state general fund to be appropriated to the State Auditor for the cost of financial reporting of tax increment financing information and the cost of examining and auditing authorities' use of tax increment financing. Subsection 2-20. Limitation of Increment Pursuant to MS, Section 469.176, Subd I a, no tax increment shall be paid to the City for the District after three (3) years from the date of certification of the Original Net Tax Capacity value of the taxable property in the District by the County Auditor unless within the three (3) year period: (l) bonds have been issued in aid of the project containing the District pursuant to MS, Section 469.178, or any other law, except revenue bonds issued pursuant to MS, Sections 469.152 to 469.165, or (2) the City has acquired property within the District, or (3) the City has constructed or caused to be constructed public improvements within the District. The bonds must be issued, or the City must acquire property or construct or cause public improvements to be constructed by approximately December, 2004 and report such actions to the County Auditor. The tax increment pledged to the payment of bonds and interest thereon may be discharged and the District may be terminated if sufficient funds have been irrevocably deposited in the debt service fund or other escrow account held in trust for all outstanding bonds to provide for the payment of the bonds at maturity or redemption date. Pursuant to MS, Section 469.176, Subd 6: if, after four years from the date of certification of the original net tax capacity of the tax increment City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No, 3-1 2-9 financing district pursuant to MS., Section 469.177, no demolition, rehabilitation or renovation of property or other site preparation, including qualified improvement of a street adjacent to a parcel but not installation of utility service including sewer or water systems, has been commenced on a parcel located within a tax increment financing district by the authority or by the owner of the parcel in accordance with the tax increment financing plan, no additional tax increment may be taken from that parcel and the original net tax capacity of that parcel shall be excluded from the original net tax capacity of the tax increment financing district. If the authority or the owner of the parcel subsequently commences demolition, rehabilitation or renovation or other site preparation on that parcel including qualified improvement of a street adjacent to that parcel, in accordance with the tax increment financing plan, the authority shall certify to the county auditor that the activity has commenced and the county auditor shall certify the net tax capacity thereof as most recently certified by the commissioner of revenue and add it to the original net tax capacity of the tax increment financing district. The county auditor must enforce the provisions of this subdivision. The authority must submit to the county auditor evidence that the required activity has taken place for each parcel in the district. The evidence for a parcel must be submitted by February 1 of the fifth year following the year in which the parcel was certified as included in the district. For purposes of this subdivision, qualified improvements of a street are limited to (1) construction or opening of a new street, (2) relocation of a street, and (3) substantial reconstruction or rebuilding of an existing street. The City or a property owner must improve parcels within the District by approximately December, 2005 and report such actions to the County Auditor. Subsection 2-21. Use of Tax Increment The City hereby determines that it will use 100 percent of the captured net tax capacity of taxable property located in the District for the following purposes: 1. to pay the principal of and interest on bonds issued to finance a project; 2. to finance, or otherwise pay the cost of redevelopment of the Development District No.3 pursuant to the MS., Sections 469.048 to 469.068; 3. to pay for project costs as identified in the budget set forth in the Plan; 4. to finance, or otherwise pay for other purposes as provided in MS., Section 469.176, Subd. 4; 5. to pay principal and interest on any loans, advances or other payments made to or on behalf the City or for the benefit of Development District No.3 by a developer; 6. to finance or otherwise pay premiums and other costs for insurance or other security guaranteeing the payment when due of principal of and interest on bonds pursuant to the Plan or pursuant to MS., Chapter 462C. MS., Sections 469.152 through 469.165, and/or MS., Sections 469.178; and 7. to accumulate or maintain a reserve securing the payment when due of the principal and interest on the tax increment bonds or bonds issued pursuant to MS., Chapter 462C, MS., Sections 469.152 through 469.165, and/or MS., Sections 469.178. These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by MS., Section 469.176, Subd. 4. Revenues derived from tax increment from a housing district must be used solely to finance the cost of housing projects as defined in M.S., Section 469.174, subd. 11. 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. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 2-10 These revenues shall not be used to circumvent any levy limitations applicable to the City nor for other purposes prohibited by MS., Section 469.176, Subd. 4. Tax increments generated in the District will be paid by Scott County to the City for the Tax Increment Fund of said District. The City will pay to the developer(s) annually an amount not to exceed an amount as specified in a developer's agreement to reimburse the costs of land acquisition, public improvements, demolition and relocation, site preparation, and administration. Remaining increment funds will be used for City administration (up to 10 percent) and the costs of public improvement activities outside the District. Subsection 2-22. Excess Tax Increments Pursuant to MS., Section 469.176, Subd 2, in any year in which the tax increment exceeds the amount necessary to pay the costs authorized by the Plan, including the amount necessary to cancel any tax levy as provided in MS., Section 475.61, Subd 3, the City shall use the excess amount to do any of the following: I. prepay any outstanding bonds; 2. discharge the pledge of tax increment therefor; 3. pay into an escrow account dedicated to the payment of such bonds; or 4. return the excess to the County Auditor for redistribution to the respective taxing jurisdictions in proportion to their local tax rates. In addition, the City may, subject to the limitations set forth herein, choose to modify the Plan in order to finance additional public costs in Development District No.3 or the District. Subsection 2-23. Requirements for Agreements with the Developer The City will review any proposal for private development to determine its conformance with the Development Program and with applicable municipal ordinances and codes. To facilitate this effort, the following documents may be requested for review and approval: site plan, construction, mechanical, and electrical system drawings, landscaping plan, grading and storm drainage plan, signage system plan, and any other drawings or narrative deemed necessary by the City to demonstrate the conformance of the development with City plans and ordinances. The City may also use the Agreements to address other issues related to the development. Pursuant to MS., Section 469.176, Subd 5, no more than 10 percent, by acreage, of the property to be acquired in the District as set forth in the Plan shall at any time be owned by the City as a result of acquisition with the proceeds of bonds issued pursuant to M.S., Section 469.178 to which tax increments from property acquired is pledged, unless prior to acquisition in excess of 1 0 percent of the acreage, the City concluded an agreement for the development of the property acquired and which provides recourse for the City should the development not be completed. Subsection 2-24. Assessment Agreements Pursuant to MS., Section 469.177, Subd 8, the City may enter into a written assessment agreement in recordable form with the developer of property within the District which establishes a minimum market value of the land and completed improvements for the duration of the District. The assessment agreement shall be presented to the county assessor who shall review the plans and specifications for the improvements to be constructed, review the market value previously assigned to the land upon which the improvements are City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-] 2-] ] to be constructed and, so long as the minimum market value contained in the assessment agreement appears, in the judgment of the assessor, to be a reasonable estimate, the county assessor shall also certify the minimum market value agreement. Subsection 2-25. Administration of the District Administration ofthe District will be handled by the Finance Director. Subsection 2-26. Annual Disclosure Requirements Pursuant to MS, Section 469. J 75, Subd. 5, 6 and 6a the City must undertake financial reporting for all tax increment financing districts to the Office of the State Auditor, County Board, County Auditor and School Board on or before August I of each year. MS., Section 469.175, Subd. 5 also provides that an annual statement shall be published in a newspaper of general circulation in the City on or before August 15. Ifthe City fails to make a disclosure or submit a report containing the information required by MS Section 469.175 Subd 5 and Subd. 6, the Office ofthe State Auditor will direct the County Auditor to withhold the distribution oftax increment from the District. Subsection 2-27. Reasonable Expectations As required by the TIF Act, in establishing the District, the determination has been made that the anticipated development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the District permitted by the Plan. In making said determination, reliance has been placed upon written representations made by the developer to such effects and upon City staff awareness of the feasibility of developing the project site. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. Such analysis is included with the cashflow in Appendix D, and indicates that the increase in estimated market value of the proposed development (less the indicated subtractions) exceeds the estimated market value of the site absent the establishment of the District and the use oftax increments. Subsection 2-28. Other Limitations on the Use of Tax Increment 1. General Limitations. All revenue derived from tax increment shall be used in accordance with the Plan. The revenues shall be used to finance, or otherwise pay the cost of redevelopment of the Development District No.3 pursuant to the MS., Sections 469.048 to 469.068. Tax increments may not be used to circumvent existing levy limit law. No tax increment may be used for the acquisition, construction, renovation, operation, or maintenance of a building to be used primarily and regularly for conducting the business of a municipality, county, school district, or any other local unit of government or the state or federal government. This provision does not prohibit the use of revenues derived from tax increments for the construction or renovation of a parking structure. 2. Restriction on Pooling; Five Year Limit. Pursuant to MS, Section 469.1763, (I) the tax increment derived from the District must be expended on Public Costs of the housing project as defined in MS., Section 469.174, subd. 11 and subject to the requirements set forth in MS., Section 469.1761 and (2) City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 2-12 public costs shall be limited to reimbursement of public costs paid before or within five years after certification of said the District by the County Auditor and interest on all such unreimbursed expenditures. Subsection 2-29. Summary The City is establishing the District to provide an impetus for residential development and provide safe and decent life cycle housing in the City. The TIF Plan for the District was prepared by Ehlers & Associates, Inc., 3060 Centre Pointe Drive, RoseviIle, Minnesota 55113-1105, telephone (651) 697-8500. City of Prior Lake Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 2-13 APPENDIX A PROJECT DESCRIPTION The proposed 54 unit senior housing project will consist of 14 one bedroom and 40 two bedroom units. The rent rate will include one underground, heated parking stall for each unit. The building, located at ]6435 Tranquility Court SE in Prior Lake, will encompass site coverage of20,798 square feet. The estimated cost of the proposed senior housing project will be $5,264,556 with commencement of construction to begin this fall, 2001. APPENDIX A-I ._".."..~-~---.....~"._~~.._-~.__."..~_._,~..~~.__.,~._."...,."~-~~~._.__........"."....._..._",,,...,.......~.....~..'~-~'_'",--_..-~ Tax Increment Financing District No. 3-1 Development District No.3 City of Prior Lake Scott County, Minnesota 12 1 10 9 L...l1.' r~ 1fT AD 'N OKE S DE I 2 I EST TEs .. ~ CATES ST. S.E. S OUTLOT A 8 2 ~ 2 CQOR s Tax Increment Financing District No. 3-1 and Development District No.3 ~i~o '~ ~1,Jj0<;;~. . ,<, W~ ~ ~ PF s 12 2 S\~ l:I ^ ... N A 200 , o 200 400 Feet The boundaries of Tax Increment Financing District No. 3-1 are coterminous with the boundaries of Development District NO.3. APPENDIX C DESCRIPTION OF PROPERTY TO BE INCLUDED IN THE DISTRICT The District encompasses all property and adjacent rights-of-way identified by the parcel listed below. Parcel Number 25-378-003-0 Address 16435 Tranquility Court SE APPENDIX C-I APPENDIX D ESTIMATED CASH FLOW FOR THE DISTRICT APPENDIX D-I 12/10101 City Of Prior lake Page 1014 APPENDIX D TIF DISTRICT NO. 3-1 T.I.F. CASH FLOW ASSUMPTIONS Inflation Rate: Present Value Rate Pay As You Go Note: Note Issue Date: Tax Extension Rate Frozen: (from City) Tax Extension Rate Current: (from City) Assumes Rrst Tax Increment Years of Tax Increment Amount of increment will vary depending upon market value, tax rates, class rates. construction schedule, and inflation on market value. Inflation on tax rates cannot be captured. 0.0000% 7,000% February 1, 2002 1.200000 est. Pay 2002 1.200000 est. Pay 2002 2004 25 PID Market Class Tax Date Value Rate Capacity Payable 25-378-003-0 15,000 1.25% 188 2002 Total 15,000 188 BASE VALUE INFORMATION Number Class Total Tax Market Date Units Rate Taxes Capacity Value Payable Housing 54 1.25% 62,250 51,875 4,150,000 2004 Total 54 62,250 51,875 4,150,000 PROJECT INFORMATION Prepared by Ehlers Plan11-5-01.xls 12110101 City Of Prior lake Page 2 of 4 Base Project Captured Semi-Annual State Aud. Admin Semi-Annual Semi-Annual PAYMENT DATE PERIOD BEGINNING Tax Tax Tax Gross Tax at at Gross Tax Present Pay Yrs. Mth. Yr. Caoacitv Caoacitv Capacity Increment 0.50% 10.00% Increment Value Yrs. Mth. Yr. 0.0 02-01 2002 188 188 0 0 0 0 0 0 0.0 08-01 2002 0.0 08-01 2002 188 188 0 0 0 0 0 0 0.0 02-01 2003 0.0 02-01 2003 188 188 0 0 0 0 0 0 0.0 08-01 2003 0.0 08-01 2003 188 188 0 0 0 0 0 0 0.0 02-01 2004 0.0 02-01 2004 188 51,875 51,688 31,013 (155) (3,117) 27,741 23,357 0.5 08-01 2004 0,5 08-01 2004 188 51,875 51,688 31,013 (155) (3,117) 27,741 45,924 1.0 02-01 2005 1.0 02-01 2005 188 51,875 51,688 31,013 (155) (3,117) 27,741 67,728 1.5 08-01 2005 1.5 08-01 2005 188 51,875 51,688 31,013 (155) (3,117) 27,741 88,794 2.0 02-01 2006 2.0 02-01 2006 188 51,875 51,688 31,013 (155) (3,117) 27,741 109,149 2.5 08-01 2006 2.5 08-01 2006 188 51,875 51,688 31,013 (155) (3,117) 27,741 128,815 3.0 02-01 2007 3.0 02-01 2007 188 51,875 51,688 31,013 (155) (3,117) 27,741 147,815 3.5 08-01 2007 3.5 08-01 2007 188 51,875 51,688 31,013 (155) (3,117) 27,741 166,174 4.0 02-01 2008 4.0 02-01 2008 188 51,875 51,688 31,013 (155) (3,117) 27,741 183,911 4.5 08-01 2008 4.5 08-01 2008 188 51,875 51,688 31,013 (155) (3,117) 27,741 201,049 5.0 02-01 2009 5.0 02-01 2009 188 51,875 51,688 31,013 (155) (3,117) 27,741 217,607 5.5 08-01 2009 5.5 08-01 2009 188 51,875 51,688 31,013 (155) (3,117) 27,741 233,605 6.0 02-01 2010 6.0 02-01 2010 188 51,875 51,688 31,013 (155) (3,117) 27,741 249,063 6.5 08-01 2010 6,5 08-01 2010 188 51,875 51,688 31,013 (155) (3,117) 27,741 263,997 7.0 02-01 2011 7.0 02-01 2011 188 51,875 51,688 31,013 (155) (3,117) 27,741 278,426 7.5 08-01 2011 7.5 08-01 2011 188 51,875 51,688 31,013 (155) (3,117) 27,741 292,368 8.0 02-01 2012 8.0 02-01 2012 188 51,875 51,688 31,013 (155) (3,117) 27,741 305,838 8.5 08-01 2012 8.5 08-01 2012 188 51,875 51,688 31,013 (155) (3,117) 27,741 318,853 9.0 02-01 2013 9.0 02-01 2013 188 51,875 51,688 31,013 (155) (3,117) 27,741 331,427 9.5 08-01 2013 9.5 08-01 2013 188 51,875 51,688 31,013 (155) (3,117) 27,741 343,576 10.0 02-01 2014 10.0 02-01 2014 188 51,875 51,688 31,013 (155) (3,117) 27,741 355,315 10.5 08-01 2014 10.5 08-01 2014 188 51,875 51,688 31,013 (155) (3,117) 27,741 366,656 11.0 02-01 2015 11.0 02-01 2015 188 51,875 51,688 31,013 (155) (3,117) 27,741 3n,614 11.5 08-01 2015 11.5 08-01 2015 188 51,875 51,688 31,013 (155) (3,117) 27,741 388,201 12.0 02-01 2016 12.0 02-01 2016 188 51,875 51,688 31,013 (155) (3,117) 27,741 398,431 12.5 08-01 2016 12.5 08-01 2016 188 51,875 51,688 31,013 (155) (3,117) 27,741 408,314 13.0 02-01 2017 13.0 02-01 2017 188 51,875 51,688 31,013 (155) (3,117) 27,741 417,863 13,5 08-01 2017 13.5 08-01 2017 188 51,875 51,688 31,013 (155) (3,117) 27,741 427,090 14.0 02-01 2018 14.0 02-01 2018 188 51,875 51,688 31,013 (155) (3,117) 27,741 436,004 14.5 08-01 2018 14.5 08-01 2018 188 51,875 51,688 31,013 (155) (3,117) 27,741 444,617 15.0 02-01 2019 15.0 02-01 2019 188 51,875 51,688 31,013 (155) (3,117) 27,741 452,938 15.5 08-01 2019 15.5 08-01 2019 188 51,875 51,688 31,013 (155) (3,117) 27,741 460,978 16.0 02-01 2020 16.0 02-01 2020 188 51,875 51,688 31,013 (155) (3,117) 27,741 468,747 16.5 08-01 2020 16.5 08-01 2020 188 51,875 51,688 31,013 (155) (3,117) 27,741 476,252 17.0 02-01 2021 17,0 02-01 2021 188 51,875 51,688 31,013 (155) (3,117) 27,741 483,504 17.5 08-01 2021 17.5 08-01 2021 188 51,875 51,688 31,013 (155) (3,117) 27,741 490,511 18.0 02-01 2022 18.0 02-01 2022 188 51,875 51,688 31,013 (155) (3,117) 27,741 497,280 18.5 08-01 2022 18.5 08-01 2022 188 51,875 51,688 31,013 (155) (3,117) 27,741 503,821 19.0 02-01 2023 19.0 02-01 2023 188 51,875 51,688 31,013 (155) (3,117) 27,741 510,140 19.5 08-01 2023 19.5 08-01 2023 188 51,875 51,688 31,013 (155) (3,117) 27,7411 516,246 20.0 02-01 2024 20.0 02-01 2024 188 51,875 51,688 31,013 (155) (3,117) 27,741 522,145 20.5 08-01 2024 20,5 08-01 2024 188 51,875 51,688 31,013 (155) (3,117) 27,741 527.845 21.0 02-01 2025 21.0 02-01 2025 188 51,875 51,688 31,013 (155) (3,117) 27,741 533,352 21,5 08-01 2025 21.5 08-01 2025 188 51,875 51,688 31,013 (155) (3,117) 27,741 538,673 22.0 02-01 2026 22.0 02-01 2026 188 51,875 51,688 31,013 (155) (3,117) 27,741 543,814 22.5 08-01 2026 22.5 08-01 2026 188 51,875 51,688 31,013 (155) (3,117) 27,741 548,781 23.0 02-01 2027 23.0 02-01 2027 188 51,875 51,688 31,013 (155) (3,117) 27,741 553,580 23.5 08-01 2027 23.5 08-01 2027 188 51,875 51,688 31,013 (155) (3,117) 27,741 558,217 24.0 02-01 2028 24.0 02-01 2028 188 51,875 51,688 31,013 (155) (3,117) 27,741 562,697 24.5 08-01 2028 24.5 08-01 2028 188 51,875 51,688 31,013 (155) (3,117) 27,741 567,025 25.0 02-01 2029 25.0 02-01 2029 188 51,875 51,688 31,013 (155) (3,117) 27,741 571,208 25.5 08-01 2029 25.5 08-01 2029 188 51,875 51,688 31,013 (155) (3,117) 27,741 575,248 26.0 02-01 2030 Totals 1,612,650 (8,063) (162,072) 1,442,515 Present Value 643,095 575,248 APPENDIX D TIF DISTRICT NO. 3-1 T.I.F. CASH FLOW ASSUMPTIONS Prepared by Ehlers Pian11-5-01.xis APPENDIX E HOUSING QUALIFICATIONS FOR THE DISTRICT No. of Persons 50% of Median 60% of Median 80% of Median Income Income Income I-person $26,150 $31,380 $41,824 2-person $29,900 $35,880 $47,840 3-person $33,600 $40,320 $53,760 4- erson $37,350 $44,820 $59,760 Source: Department of Housing and Urban Development The three options for income limits on a standard housing district are 20% of the units at 50% of median income, 40% of the units at 60% of median income, or 50% of the units at 80% of median income. At the time a district is established, the project needs to choose one of the options and meet those requirements for the life of the district. The City elects that 20% of the units will be at 50% of the median income. There are no rent restrictions for a standard housing district. APPENDIX E-I APPENDIX F BUT/FOR QUALIFICATIONS Current Market Value Est. New Market Value Est. Difference Present Value of Tax Increment Difference Value Likel to Occur Without TIF is Less Than: $15,000 4,150.000 $4,135,000 643,095 $3,491,905 $3,491,905 APPENDIX F-) The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing pistrict No. 3-1, as required pursuant to Minnesota Statutes, Section 469.175, Subdivision 3 are as follows: I. Finding that Tax Increment Financing District No. 3-1 is a housing district as defined in MS., Section 469.174, Subd. II. Tax Increment Financing District No. 3-1 consists of one parcel. The development will consist of rental housing. At least 20 percent of the units/homes receiving assistance will have incomes at or below 50 percent of statewide median income. The market value of non-assisted housing or commercial property will be less than 20 percent of the total fair market value of the planned improvements. Appendix E of the TIF plan contains detailed analysis for the above finding. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future and that the increased market value of the site that could reasonably be expected to occur without the use of tax increment financing would be less than the increase in the market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of Tax Increment Financing District No. 3-1 permitted by the Plan. The proposed development, in the opinion of the City, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future: This finding is supported by the fact that the development proposed in this plan is a housing that meets the City's objectives for development and redevelopment. The cost site and public improvements and utilities makes this housing development infeasible without City assistance. Due to the high cost of building affordable new housing in the City and the cost of financing the proposed public improvements, this project is feasible only through assistance, in part, from tax increment financing. The developer was asked for and provided a letter and a proforma as justification that the developer would not have gone forward without tax increment assistance (see attachment in Appendix F of the TIF plan). The increased market value of the site that could reasonable be expected to occur without the use of tax increment financing would be less than the increase in market value estimated to result from the proposed development after subtracting the present value of the projected tax increments for the maximum duration of the TIF District permitted by the Plan: The City supported this finding on the grounds that the cost of site and public improvements and u~ilities add to the total development cost. Historically, site development costs in this area have made development infeasible without tax increment assistance. Therefore, the City reasonably determines that no other development of similar scope is anticipated on this site without substantially similar assistance being provided to the development. A comparative analysis of estimated market values both with and without establishment of the District and the use of tax increments has been performed as described above. If all development which is proposed to be assisted with tax increment were to occur in the District, the total increase in market value would be up to $4,135,000. The present value of tax increments from the District is estimated to be $643,095. It is the Council's finding that no development with a market value of greater than $3,491,905 would occur without tax increment assistance in this district within 25 years. This finding is based upon evidence from general past experience with the high cost of and public improvements in the general area of the District (see Cashflow in Appendix D of the TIF plan). APPENDIX F-2 3. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the Plan and found that the Plan conforms to the general development plan of the City. 4. Finding that the Tax Increment Financing Plan for Tax Increment Financing District No. 3-1 will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No.3 by private enterprise. \_'"' Through the implementation of the Plan, the City will provide an impetus for residential development, desirable or necessary for increased population with the City. APPENDIX F-3 Several Minnesota communities are seeking solutions to their growing housing needs. Most are faced with the problem that is currently plaguing some metropolitan communities throughout Minnesota. In some metropolitan communities it is not financially feasible to build market rate assisted housing complexes, since rent levels cannot be met to justify development. Many metropolitan communities and larger regional growth centers have experienced substantial growth during the 1990s. In these areas, the primary housing issue is simply how much of each housing type to build. In some metropolitan areas, particularly county seats, even though there has been favorable growth, incomes are often too low to justify a housing development. In order to facilitate housing growth in communities such as Prior Lake, outside economic assistance is vital. One vehicle is tax increment financing, which we are in the process of requesting. However, in light of the development projections, an additional source will be needed to fund the approximate (to be detennined) gap to make this 54 unit project a reality. Subsequently, we respectfully request the City of Prior Lake consider our application for funding in order to make this development a reality. The proposed development will provide to the City of Prior Lake, housing for seniors, who at this time do not want the continued responsibility of maintaining a single-family home. In having this housing available, seniors will be able to live in Prior Lake amongst their friends and relatives in a very comfortable setting. In addition, by providing this housing to the seniors, single family homes will be freed up for young families wishing to stay in Prior Lake and new families coming to the City. At this time, it is difficult to estimate the increase in property valuation or new job creation; however, this project will approach five million dollars in new construction. Overall, the City of Prior Lake will benefit in providing this proposed housing for many years to come. APPENDIX F-4 Target Rent Schedule Creekside Estates (Without TIF) Monthly Number Square Rent Rent Annual of Units Feet Rate Potential Potential A One Br (30% of inc.) 10 763 $ 650 $ 6,500 $ 78,000 Ahc One Br (30% of inc.) 1 763 $ 650 $ 650 $ 7,800 B Two Br 3 913 $ 885 $ 2,655 $ 31,860 B1 Two Br 16 933 $ 905 $ 14,480 $ 173,760 B2 Two Br 6 962 $ 929 $ 5,574 $ 66,888 B3 Two Br 3 1015 $ 965 $ 2,895 $ 34,740 c One Br 3 766 $ 829 $ 2,487 $ 29,844 D Two Br 3 1005 $ 955 $ 2,865 $ 34,380 E One Br + Den, 2 Bth 3 1030 $ 1,050 $ 3,150 $ 37,800 E1 One Br + Den, 2 Bth 1 1010 $ 1,030 $ 1,030 $ 12,360 F Two Br + Den, 2 Bth 3 1276 $ 1,210 $ 3,630 $ 43,560 F1 Two Br + Den, 2 Bth 1 1211 $ 1 ,200 $ 1,200 $ 14,400 Ghc Two Br 1 933 $ 905 $ 905 $ 10,860 Total Units 54 Current Monthly Potential $ 48,021 Current Annual Potential $ 576,252 NOTE: Rents include one underground heated parking stall. 11 units rented @ 50% AMI for Scott County Page 1 of 5 Square Ftl Rent $ I Sq Ft A One Br 763 $ 650 0.85 Ahc One Br 763 $ 650 0.85 B Two Br 913 $ 885 0.97 B1 Two Br 933 $ 905 0.97 B2 Two Br 962 $ 929 0.97 B3 Two Br 1015 $ 965 0.95 c One Br 766 $ 829 1.08 D . Two Br 1005 $ 955 0.95 E One Br + Den, 2 Bth 1030 $ 1,050 1.02 E1 One Br + Den, 2 Bth 1010 $ 1,030 1.02 F Two Br + Den, 2 Bth 1276 $ 1,210 0.95 F1 Two Br + Den, 2 Bth 1211 $ 1 ,200 0.99 Ghc Two Br 933 $ 905 0.97 Owner Paid Utilities: Gas Heat: YES Water / Sewer: YES Refuse: YES Unit Electric: NO . Other Property Amenities: Heated Garage Wall AlC Elevator In-unit Laundry Community Room Window Coverings Office Refrigerator, Range, Dishwasher Library Card / Activity Room Guest Room , Page 2 of 5 Property Investment Analysis Creekside Estates Num of Units 54 TYPICAL YEAR PROJECTION Num of Garages: 54 Stabilized Year - 2002 . The statements and figures herein, while not guaranteed, are secured from sources we believe authoritative. INCOME Income/unitIYear Income/uniUmo Gross Suite Potential 576,252 10,671.33 889.28 Suite Vacancy % @ 5 (28,813) (533.57) (44.46) Net Suite Rental Income 547,439 10,137.77 844.81 Gross Garage Potential included in suite rent - - Garage Vacancy % @ 0 - - - Net Garage Income - - - Misc. Income - - Vending Income 500 9.26 0.77 Storage Income 2,200 Damages Income 600 11.11 0.93 Late Rent Fee 200 3.70 0.31 Forfeit See Dep 800 14.81 1.23 Interest Income . 300 5.56 0.46 Total Misc,lncome 4,600 85.19 7.10 Total Effective Gross Income 552,039 10,222.95 851.91 . EXPENSES Exp/unitlyr Exp/unitlmo STAFFING Suite Credit - Manager/Janitor 16,000 296.30 24.69 Garage Credit - Mgr/shop - - - Wages Manager / Maint 6,000 111.11 9.26 Manager Leasing Incentive 1,000 18.52 1.54 TOTAL STAFF EXPENSE 23,000 425.93 35.49 . ADMINISTRATIVE/OPERATING Management Fee 27,602 511.15 42.60 CrediUCriminal Check 100 1.85 0.15 Office Exp 500 9.26 0.77 Permits & License 400 7.41 0.62 Security Dep. Interest 150 2.78 0.23 Public Relations 800 14.81 1.23 Bank Charges 50 0.93 0.08 Legal/Accounting 1,000 18.52 1.54 Insurance 7,000 129.63 10.80 Payroll I Work Comp 2,760 51.11 4.26 Advertising 5,000 92.59 7.72 Telephone/Pagers 1,800 33.33 2.78 Miscellaneous 1,000 18.52 1.54 TOTAL ADMINISTRATIVE/OP 48,162 891.89 74.32 Page 3 of 5 Property Investment Analysis EXPENSES UTILITIES Exp/unitlyr Exp/unitlmo Electric 6,800 125.93 10.49 Gas (Owner paid unit heat) 19,000 351.85 29.32 WaterlSewer 12,000 222.22 18.52 Refuse 4,000 74.07 6.17 TOTAL UTILITIES 41,800 77 4.07 64.51 MAINT & REPAIR General Repairs 8,000 148.15 12.35 Appliance Repair 500 9.26 0.77 Janitorial Supplies 600 11 .11 < 0.93 Plumbing Repair and Supplies 700 12.96 1.08 Heating Repair and Supplies 1,000 18.52 1.54 Electrical Repair and Supplies 550 10.19 0.85 Elevator Maint 1,800 33.33 2.78 Carpet Cleaning 1,000 18.52 1.54 Unit Painting 1,800 . 33.33 2.78 Maintenance Equipment I Supplies 800 14.81 1.23 Grounds Maintenance I Snow 6,700 124.07 10.34 Miscellaneous 1,000 18.52 1.54 TOTAL MAl NT & REPAIR 24,450 452.78 37J3 PROPERTY TAX. Real Estate Tax (1.25% Class Rate) 50,000 925.93 77.16 (without TIF) TOTAL O/M EXPENSES 187,412 3,4 70.59 289.22 Net Operating Income 364,627 6,752.36 562.70 Debt Service: (315,227) (5,837.54) (486.46) Debt Coverage Ratio 1.16 Cash Flow 49,400 914.82 76.24 Cash on Cash Return 3.75% Page 4 of 5 Property Investment Analysis Development Cost Analysis Creekside Estates Proiect BudQet Land $ 324,000 Per Unit Cost 6,000.00 Site Development $ 395,000 Per Unit Cost 7,314.81 Building Cost $ 4,081,956 Per Unit Cost , 75,591.78 Equipment $ 220,000 Per Unit Cost 4,074.07 Architectural! Engineering $ 114,000 Per Unit Cost 2,111:11 Legal $ 10,000 Per Unit Cost j 185.19 Off-site development costs $ 119,600 Per Unit Cost 2,214.81 Total Development Cost $ 5,264,556 Per Unit Cost 97,491.78 75% L TV $ 3,948,417 Per Unit Cost 73,118.83 Investment Down Required $ 1,316,139 Per Unit Cost 24,372.94 MORTGAGE TERMS Payment (315,227) Interest Rate 7.00 Term 30 Page 5 of 5 Target Rent Schedule - Creekside Estates (With TIF) Monthly Number Square Rent Rent Annual of Units Feet Rate Potential - Potential A One Br (30% of inc.) 10 763 $ 650 $ 6,500 $ 78,000 Ahc One Br (300/0 of inc.) 1 763 $ 650 $ 650 $ 7,800 B Two Br 3 913 $ 885 $ 2,655 $ 31,860 B1 Two Br 16 933 $ 905 $ 14,480 $ 173,760 82 Two Br - 6 962 $ 929 $ 5,574 $ 66,888 B3 Two Br 3 1015 $ 965 $ 2,895 $ 34,740 c One Br 3 766 $ 829 $ 2,487 $ 29,844 0 Two Br 3 1005 $ 955 $ 2,865 $ 34,380 E One Br + Den, 2 Bth 3 1030 $ 1,050 $ 3,150 $ 37,800 E1 One Br + Den, 2 Bth 1 1010 $ 1,030 $ 1,030 $ 12,360 F Two Br + Den, 2 Bth 3 1276 $ 1,210 $ 3,630 $ 43,560 F1 Two Br + Den, 2 Bth 1 1211 $ 1,200 $ 1,200 $ 14,400 Ghc Two Br , 1 933 $ 905 $ 905 $ 10,860 Total Units 54 - Current Monthly Potential $ 48,021 Current Annual Potential $ 576,252 NOTE: Rents include one underground heated parking stall. 11 units rented @ 50% AMI for Scott County Page 1 of 5 Square Ft Rent I $ I Sq Ft A One Sr 763 $ 650 0.85 . Ahc One Sr 763 $ 650 0.85 8 Two Sr 913 $ 885 0.97 81 Two Sr 933 $ 905 0.97 82 Two Sr 962 $ 929 0.97 83 Two Sr 1015 $ 965 0.95 c One Br 766 $ 829 1.08 . 0 Two Sr 1005 $ 955 0.95 E One Sr + Den, 2 Bth 1030 $ 1,050 1.02 E1 One Br + Den, 2 Bth 1010 $ 1,030 1.02 F Two Sr + Den, 2 Bth 1276 $ 1,210 0.95 F1 Two Br + Den, 2 Bth 1211 $ 1 ,200 0.99 Ghc Two Sr 933 $ 905 0.97 . Owner Paid Utilities: Gas Heat: YES Water / Sewer: YES Refuse: YES Unit Electric: NO Other Property Amenities: Heated GaraQe Wall AlC Elevator In-unit Laundry Community Room Window CoverinQs Office RefriQerator, RanQe, Dishwasher Library Card / Activity Room Guest Room . Page 2 of 5 Property Investment Analysis Creekside Estates Num of Units 54 TYPICAL YEAR PROJECTION Num of Garages: 54 Stabilized Year - 2002 The statements and figures herein, while not guaranteed, are secured from sources we believe authoritative. INCOME Income/unitIY ear Income/uniUmo Gross Suite Potential 576,252 10,671.33 889.28 Suite Vacancy % @ 5 (28,813) (533.57) (44.46) Net Suite Rental Income 547,439 10,137.77 844.81 Gross Garage Potential included in suite rent - - Garage Vacancy % @, 0 - - - Net Garage Income - - - Misc. Income - - Vending Income 500 9.26 0.77 Storage Income 2,200 Damages Income 600 11.11 0.93 Late Rent Fee . 200 3.70 0.31 Forfeit Sec Dep 800 14.81 1.23 Interest Income 300 5.56 0.46 Total Misc Income 4,600 85.19 7.10 Total Effective Gross Income 552,039 10,222.95 851.91 EXPENSES Exp/uniUyr Exp/uniUmo STAFFING Suite Credit - Manager/Janitor 16,000 296.30 24.69 Garage Credit - Mgr/shop - - - Wages Manager / Maint 6,000 111.11 9.26 Manager Leasing Incentive 1,000 18.52 1.54 TOTAL STAFF EXPENSE 23,000 425.93 35.49 - ADMIN ISTRA TIVE/OPERA TING Management Fee 27,602 511.15 42.60 CrediVCriminal Check 100 1.85 0.15 Office Exp 500 9.26 0.77 Permits & License 400 7.41 0.62 Security Dep. Interest 150 2.78 0.23 Public Relations 800 14.81 1.23 Bank Charges 50 0.93 0.08 Legal/Accounting 1,000 18.52 1.54 Insurance 7,000 129.63 10.80 Payroll/ Work Comp 2,760 51.11 4.26 Advertising 5,000 92.59 7.72 Telephone/Pagers 1,800 33.33 2.78 Miscellaneous 1,000 18.52 1.54 TOTAL ADMINISTRATIVE/OP 48,162 891.89 74.32 Page 3 of 5 Property Investment Analysis EXPENSES UTILITIES Exp/unitlyr Exp/unitlmo Electric 6,800 125.93 10.49 Gas (Owner paid unit heat) 19,000 351.85 29.32 Water/Sewer 12,000 222.22 18.52 Refuse 4,000 74.07 6.17 TOTAL UTILITIES 41,800 774.07 64.51 MAINT & REPAIR General Repairs 8,000 148.15 12.35 Appliance Repair 500 9.26 0.77 Janitorial Supplies . 600 11.11 0.93 Plumbing Repair and Supplies 700 12.96 1.08 Heating Repair and Supplies 1,000 18.52 1.54 Electrical Repair and Supplies 550 10.19 0.85 Elevator Maint 1,800 33.33 2.78 Carpet Cleaning - 1,000 18.52 1.54 Unit Painting 1,800 33.33 2.78 Maintenance Equipment I Supplies 800 14.81 1.23 Grounds Maintenance I Snow 6,700 124.07 10.34 Miscellaneous 1,000 18.52 1.54 TOTAL MAINT & REPAIR 24,450 452.78 37.73 PROPERTY TAX Real Estate Tax (1.25% Class Rate) 5,000 92.59 7.72 (with TIF) TOTAL OIM EXPENSES 142,412 2,637.26 219.77 Net Operating Income 409,627 7,585.69 632.14 . . Debt Service: (315,227) (5,837.54) (486.46) Debt Coverage Ratio 1.30 Cash Flow 94,400 1,748.16 145.68 Cash on Cash Return 7.17% Page 4 of 5 Property Investment Analysis Development Cost Analysis Creekside Estates Project BudQet . Land $ 324,000 Per Unit Cost 6,000.00 Site Development $ 395,000 Per Unit Cost 7,314.81 Building Cost $ 4,081,956 Per Unit Cost 75,591.78 Equipment $ 220,000 Per Unit Cost 4,074.07 Architectural/Engineering $ 114,000 Per Unit Cost 2,111.11 Legal $ 10,000 Per Unit Cost 185.19 Off-site development costs $ 119,600 Per Unit Cost 2,214.81 Total Development Cost $ 5,264,556 Per Unit Cost 97,491.78 75% L TV $ 3,948,417 Per Unit Cost 73,118.83 Investment Down Required $ 1,316,139 Per Unit Cost 24,372.94 MORTGAGE TERMS Payment (315,227) Interest Rate 7.00 Term 30 Page 5 of 5