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EHLERS
<br />PUBLIC FINANCI
<br />MEMORANDUM
<br />TO: Sean Sullivan, Economic Development Manager
<br />FROM: Jason Aarsvold, Ehlers
<br />DATE: August 1, 2023
<br />SUBJECT: Presbyterian Homes TIF Request
<br />The City of Ramsey (the "City") received a financial assistance request from Presbyterian Homes
<br />(the "Developer") to construct a rental housing community located at 14501 Nowthen Blvd. The
<br />project will be built in two separate phases. Phase 1 will include construction of a 280-unit general
<br />occupancy apartment with at least 20% of the units occupied by persons and families whose
<br />incomes do not exceed 50% of area median income (AMI). Phase 2 will include a 160-unit senior
<br />(ages 62+) apartment and 20 (ages 55+) rental park homes and with at least 20% of the units
<br />occupied by persons and families whose incomes do not exceed 50% of AMI.
<br />The Developer's initial request for TIF assistance was just over $22 million for the project. After a
<br />review of values with the county assessor, legislative changes to the affordable housing tax
<br />classification rate and other project specifics, Ehlers determined the project could not generate
<br />that amount of increment. The Developer's request was subsequently reduced as outlined below.
<br />Phase 1 TIF Request
<br />The Developer requested $7.3 million in tax increment financing (TIF) to make Phase 1 financially
<br />feasible. Ehlers conducted a thorough review of the Developer's current pro forma based on
<br />industry standards for construction, land, and project costs, affordable rental rates and operating
<br />expenses, developer fees, available funding sources, underwriting criteria, and project cash flow.
<br />Based on the results of the pro forma analysis, we conclude the project would require $5.632
<br />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 />TOTAL SOURCES
<br />Amount Pct. Per Unit
<br />54,922,742 61.8% 196,153
<br />5,632,000 6.3% 20,114
<br />28,306,318 31.9% 101,094
<br />88,861,060 100% 317,361
<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 />Amount Pct. Per Unit
<br />3,500,000 3.9% 12,500
<br />71,243,193 80.2% 254,440
<br />5,583,334 6.3% 19,940
<br />3,394,570 3.8% 12,123
<br />3,432,156 3.9% 12,258
<br />1,707,807 1.9% 6,099
<br />88,861,060 100% 317,361
<br />BUILDING COMMUNITIES. IT'S WHAT WE DO. info@ehlers-inc.com 1 (800) 552-1171
<br />www.ehlers-inc.com
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