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%EHLERS <br />PUBLIC FINANCE ADVISORS <br />• Developer Fee: The developer fee of $3,432,156 is 3.9% of total development costs. This is <br />within the typical industry range of 3-5% for rental projects. The proposed fee is within the <br />typical range. <br />• Return on Investment - The project's average yield on cost return on investment (net <br />operating income / total development costs) with 20 years of TIF assistance is 7%. <br />Developers typically need a yield on cost of between 6.5% to 7% for feasibility. Since the <br />project reaches this level within 20 years, we conclude TIF payments can stop at this point. <br />Phase 2 TIF Request <br />The Developer requested $4.68 million in tax increment financing (TIF) to make Phase 2 financially <br />feasible. Based on the results of the pro forma analysis, we conclude the project would require <br />$3.631 million in TIF assistance to achieve financial feasibility, which is a projected 20 years of TIF <br />payments. The Developer determined they can proceed with the recommended level of <br />assistance. The table below depicts the proposed sources and uses for the project. <br />SOURCES <br />First Mortgage <br />TIF Mortgage (Note) <br />Equity <br />Fundraising <br />TOTAL SOURCES <br />Amount Pct. Per Unit <br />40,297,092 58.8% 223,873 <br />3,631,000 5.3% 20,172 <br />20,705,611 30.2% 115,031 <br />3,905,000 5.7% 21,694 <br />68,538,703 100% 380,771 <br />USES <br />Acquisition Costs <br />Construction Costs <br />Professional Services <br />Financing Costs <br />Developer Fee <br />Cash Accounts/Escrows/Reserves <br />TOTAL USES <br />Phase 2 Project and Pro Forma Analysis: <br />Amount Pct. Per Unit <br />2,070,000 3.0% 11,500 <br />51,214,567 74.7% 284,525 <br />9,236,520 13.5% 51,314 <br />2,424,672 3.5% 13,470 <br />2,332,227 3.4% 12,957 <br />1,260,717 1.8% 7,004 <br />68,538,703 100% 380,771 <br />• Project Financing: The Developer proposes to finance Phase 2 with a combination of debt <br />and equity. The project assumes 64% debt financing (including the TIF portion) and 30% <br />equity. The remining portion will come through fundraising efforts. The proposed financing <br />is acceptable for the project. <br />• Total Development Costs (TDC): The TDC of the project is nearly $68.5 million or $380,771 <br />per unit. Projects like this one are generally ranging between $250,000 and $325,000 per <br />unit. The cost of the 20 park homes brings up this cost, however. The Phase 2 buildings <br />are within the market range. <br />• Land Acquisition Costs: The proposed land acquisition cost is $2.07 million or <br />approximately $11,500 per unit. We would expect the cost of land to be between $7,000 <br />and 15,000 per unit, so this land purchase price is acceptable for the project. <br />BUILDING COMMUNITIES. IT'S WHAT WE DO. <br />info@ehlers-inc.com yL) 1 (800) 552-1171 <br />www.ehlers-inc.com <br />