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Ron Moorse-TIF summary memo.wpd Page <br /> 1A <br /> EHLERS <br /> & ASSOCIATES INC <br /> LEADERS IN PUBLIC FINANCE <br /> 3868 Centre Pointe Drive 651.697.8586 fax 651.697.8555 <br /> Roseville,MN 55113-1185 rusty®ehlers-inc.c.m <br /> To: City of Orono <br /> From: Rusty Fifield <br /> Subject: Housing TIF District <br /> Date: January 31,2001 <br /> On February 8,the City Council will conduct a workshop on the senior housing project proposed <br /> by Dunbar Development. Part of the workshop will focus on the use of tax increment financing <br /> (TIF)to encourage this development. This memo summarizes the key points on the use of TIF <br /> for this project. I will attend the workshop to review this memo and to answer your questions <br /> 1. Based on discussions with the developer,the Project will meet the criteria for the creation <br /> of the housing tax increment financing district. According to State Law,the Developer <br /> will agree to satisfy the income requirements for qualified residential rental projects <br /> under Section 142(d)of the Internal Revenue Code,or 50 percent of the units must be <br /> occupied by individuals with income 80 percent or less of the area median income. These <br /> requirements apply to the life of the TIF District. <br /> 2. Based on the preliminary information provided by the developer,we believe that the use <br /> of tax increment financing is needed to make the developer financially feasible. The rents <br /> needed to cover development costs without TIF are not affordable. <br /> 3. Assistance will be provided to the developer on a"pay-as-you-go" basis. The City agrees <br /> to reimburse the developer for a specified amount of project costs with interest over a <br /> fixed period of time. No City funds are advanced for the project. The City has no <br /> obligation to satisfy the agreement if tax increment revenues do not occur as projected. <br /> 4. The City will retain the first 10%of the tax increment for administration and other <br /> eligible expenses. The current proposal would pay the developer 90%of the tax <br /> increment collected every year for a 15 to 20 year period(final term to be determined). <br /> The attached tables show the projected flow of funds for 20 years with and without <br />