R2003-67 RECEIVING AGREEMENT - Laserfiche WebLink

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• , Memorandum#03-41 May 29,2003 Page-2- Incremental Revenues: To calculate the City's return, assume the following: • Assume 80,000 sqft. of new development @$100/ft to construct. • Assume new commercial space assessed at its construction value and remaining constant for the remainder of the TIF. Assume no increase for inflation or to reflect the value of any leases/leasehold improvements. • Assume the effect of redevelopment on adjacent/nearby property values is neutral; no increase or decrease. • Assume a constant tax rate of$8.6664(current). • Assume 30,000 sqft. of retail space producing $200/ft in sales. • Assume 16 years worth of incremental property tax revenue for Phase 1 construction and 13 years for Phase 2. • Assume Phase 1 development generates annual incremental property tax revenue of +/- $90,000 and $75,000 in sales taac; @ 16 years returns $1.440 million to the TIF Fund and $1.2 million in sales t�. • Assume Phase 2 development generates annual incremental revenue of +/- $100,000 and $75,000 in sa.les taa�; @ 13 yeazs returns $1.3 million to the TIF Fund and $975,000 in sales t�. Based on the above, the project as proposed would yield approximately $4.915 million in incremental property tax and sales tax revenues. However, the scenario described above is unrealistically conservative in that while it likely overestimates the City's total expenditures, it also underestimates the City's return. As shown, there are no allowances for inflation or increases in value due to leases/leasehold improvements, or any indirect revenue as a result of adjacent/nearby increased property values. The project as proposed represents an important step in the evolution of downtown redevelopment. It is a significant, tangible commitment on behalf of a local company with an established, vested interest in downtown. The project also represents the first opportunity for the City to work with a developer to market an approved plan and reference an identified project timeline. To date the City has been limited to conversations with owner/occupants. In many cases while attractive individual projects have been proposed, on an individual basis they have generally lacked the critical mass necessary to successfully engage in a coordinated redevelopment effort. In some cases specific users with whom the City has negotiated lacked either the interest, ability, and/or capacity to undertake a redevelopment project on an appropriate scale. In City sta.fPs view DemirCo's proposal contemplates an appropriate massing and scale and will fit in well within the conte�ct of a larger downtown redevelopment effort. As proposed this project will both complement the downtown's eausting assets and anchor an area of new investment. POTENTIAL OBJECTION: City staff is not aware of any opposition to the proposed redevelopment project. STAFF REFERENCE: If Council members have questions they ma.y contact A.J. Krieger, 424-2727, aikrie er�,decaturnet.or� .