07-21-2009 EDC Meeting - Laserfiche WebLink

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o The redevelopment of this site in the City will continue to spur economic development, stimulate market growth, and increase the tax base in Pequot Lakes. • Job Creation and Retention o The grocery operation will provide job opportunities and has estimated 80- 100 full and part-time jobs will be created due to this development. This will vary due to seasonality. Source and Use of Funds Use of Funds Property Acquisition $ 485,000 Site Work 855,000 New Construction 2,340,000 Final FF&E 2,200,000 Financing, Fees, &Cont. 642.091 TOTAL $6,522,091**** Source of Funds Owner Equity $1,122,091 Owner Debt Financing $2,400,000* SuperValu Operator $2,200,000** TIF Note Value (7.5%) $800,000*** TOTAL $6,522,091 *Oppidan will need to secure and provide evidence of debt financing. **Oppidan has several options available to raise equity and will be deciding shortly who the limited partnership will include. ***The developers are proposing tax increment financing on a pay-as-you-go basis in the amount of$800,000 over 10 years at a 7.5% interest rate. The developer may explore the option of selling the revenue note in order to provide upfront cash. Tax increment financing on a pay-as-you-go basis is needed to make this project financially feasible. ****This source and use of funds statement does not include inventory. Terms and Conditions of Tax increment Financing Request The developers are requesting consideration of$800,000 in tax increment financing assistance for 10— 15 years at a 7.5% interest rate. Based on projections prepared by the developer, approximately$40,000 in tax increment will be available for the developers in 2011 and $80,000 in tax increment annually thereafter, resulting in excess of$800,000 over 10- 15 years at a 7.5% interest rate. Oppidan is also willing to enter into a minimum assessment agreement for the development project. If the city council chooses to proceed on a conceptual basis, it is recommended that the city's financial and bond consultants conduct a confidential review of the company proformas to determine the appropriate level of tax increment assistance and interest rate needed. Redevelopment Tax Increment Financing District A redevelopment tax increment financing district is being proposed for this site. Two tests will need to be met, including a coverage test and a determination that the buildings are structurally substandard to a degree requiring substantial renovation or clearance. These determinations will need to be made prior to a public hearing being held.