Agenda - 05-20-2014 - 6a - Laserfiche WebLink

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2 Projected County Tax Increment (bar graph) 3 4 Kenneth C. Pennoyer, said one of the challenges of this project was finding a way to 5 finance the $10 million of public improvements to the traffic and storm water, which are a pre - 6 cursor to the development of the area. He said the town does not have authority sufficient to 7 borrow those funds, nor does it have a method of using the assets created in the project to do 8 an installment financing. He said an alternative structure was considered through a synthetic 9 tax increment financing. He said this would use the incremental tax revenues generated from 10 the re- development of the properties in the area to help pay for the debt service for the public 11 improvements. He said in order to make this financing plan work, the town needed to have an 12 asset to use as collateral in order to do an installment financing. 13 He said a renovation project for the town hall is being done at the same time, as a result 14 of the flooding last summer. He said the town saw an opportunity to combine these two 15 projects and use the excess collateral in the town hall building as an asset to help finance the 16 entire project. He said the town will be doing installment financing, while adding in a small 17 amount of 2/3 general obligation bonds of $1.7 million. He said this will defray the cost of the 18 town hall portion of the project. 19 Kenneth Pennoyer said the synthetic tax incrementing financing relies on the expected 20 increase in the property values in the area in order to pay the debt service on the 21 improvements. He said it is anticipated that the $10 million of debt will cost about $800,000 in 22 annual debt service payments. 23 He reviewed the graph of expected development phases. He said years 0 -4 will 24 primarily be multi - family residential, with some commercial. He said these are additive figures 25 and the term of the analysis has been stretched to 20 years to match the length of the debt 26 service. 27 Kenneth Pennoyer referred to the 20 Year Cost Benefit Comparison slide and said this 28 is the cumulative debt service based on borrowing for $10 million, compared to the town's 29 expected additional tax revenues. He said this shows the relationship between what is being 30 borrowed and what can be afforded. He said the gap represents a shortfall of the town's tax 31 increment using conservative assumptions on tax values, and this exists until 2030. 32 He reviewed the Major Revenues Schools and County slide, and said the numbers 33 under each phase represent the annual tax increment expected by the County under the 34 development scenario at the current tax rate. He said the impact on schools is based on the 35 number of multi - family housing units being built, and it is anticipated to equal $1.9 million in 36 additional fees. He said the school property tax at the current tax rate is anticipated to be 37 $549,000 after complete build out. 38 Kenneth Pennoyer said the proposed County participation is to contribute a portion of 39 the tax increment, or additional taxes generated from the development, not to exceed $400,000. 40 He noted that the tax increment will be smaller in the early years. He said the town is looking to 41 use its debt service fund in the interim to pay the differences between the increment available 42 and the actual debt. He reviewed the Projected County Tax Increment graph and said the full 43 tax increment over the 20 years would be about $7.3 million, and the net tax increment after 44 paying the debt service, would be $24 million. 45 Kenneth Pennoyer said the final 20 Year Cost Benefit Comparison slide shows how the 46 County increment provides the opportunity to match debt service with tax increment 10 years 47 earlier, in 2020. He said a partnership between the town and County will create a stronger debt 48 payment structure and a bond package that is easier to market. 49 Chair Jacobs said staff would want to do a fiscal analysis of this before there is any 50 comment on participation.