City Council Minutes 2019 11 04 - Laserfiche WebLink

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City Council Meeting Minutes November 4, 2019 Page 5 of 20 This leaves the estimated project gap of $1.1 to 1.3 million. The analysis relies on a number of key assumptions, the most important are estimated rents and construction costs. The gap could be higher. Key considerations — TIF Rebate Options • 90% of TIF, 10 Years generates $927,527 in nominal revenues which have a present value of $643,892 • 50% of TIF, 5 years generates $242,906 in nominal revenues which have a present value of $190,461 • Both options result in a remaining project gap. Key assumptions driving those estimates • Development value is estimated at $250 per square foot • Depending on the assessors valuation of the property may be as high as $300 sf • Results in a 30% increase in total TIF revenues Councilmember Maloney asked how the sales tax assumptions were calculated. Morzel stated the assumption was $350 per sf in annual sales taxed at the city rate. Mayor Pro Tem Lipton asked what happens if the first floor is office not retail or restaurant. Morzel stated that use would not generate direct sales tax. Mayor Muckle asked how the increment was calculated and if the base value was inflated. Morzel noted the base increases every two years based on the re -assessment resulting in 1.5% increase in base value over the remaining life of the TIF. Councilmember Leh noted the discount rate was 9% and asked why. Morzel said the discount rate for each project is based on a number of factors; geographical location, product type, and a key factor is a split in how the project is funded between debt and equity. Councilmember Maloney asked Director Zuccaro if this aligns with the fiscal model we use for other developments. Director Zuccaro stated the standard assumption based on less than 2500 sf is $100 and it is an average across the City, not specific to downtown. Councilmember Stolzmann asked about the agreement noting it defines the base as the most recent assessed valuation of the property. Morzel said the base comes down to the valuation from the assessor's office. City Manager Balser stated the LRC voted at their October meeting and approved the 90% rebate by a 4-2 vote. 'The resolution and agreement have been updated based on this vote. The agreement caps the assistance at $1.1 million. City Manager Balser stated options moving forward are approving, requesting time for review, or deny. Staff recommends approval based on the LRC recommendation, the