Minutes 03-27-2014 - Laserfiche WebLink

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Lesser of 50% of the actual tax increment or 50% of the actual Debt Service on the $10 million of public Improvements Maximum Annual Payment would be about $400,000 Projected County Tax Increment (bar graph) Kenneth C. Pennoyer, said one of the challenges of this project was finding a way to finance the $10 million of public improvements to the traffic and storm water, which are a pre- cursor to the development of the area. He said the town does not have authority sufficient to borrow those funds, nor does it have a method of using the assets created in the project to do an installment financing. He said an alternative structure was considered through a synthetic tax increment financing. He said this would use the incremental tax revenues generated from the re-development of the properties in the area to help pay for the debt service for the public improvements. He said in order to make this financing plan work, the town needed to have an asset to use as collateral in order to do an installment financing. He said a renovation project for the town hall is being done at the same time, as a result of the flooding last summer. He said the town saw an opportunity to combine these two projects and use the excess collateral in the town hall building as an asset to help finance the entire project. He said the town will be doing installment financing, while adding in a small amount of 2/3 general obligation bonds of$1.7 million. He said this will defray the cost of the town hall portion of the project. Kenneth Pennoyer said the synthetic tax incrementing financing relies on the expected increase in the property values in the area in order to pay the debt service on the improvements. He said it is anticipated that the $10 million of debt will cost about $800,000 in annual debt service payments. He reviewed the graph of expected development phases. He said years 0-4 will primarily be multi-family residential, with some commercial. He said these are additive figures and the term of the analysis has been stretched to 20 years to match the length of the debt service. Kenneth Pennoyer referred to the 20 Year Cost Benefit Comparison slide and said this is the cumulative debt service based on borrowing for $10 million, compared to the town's expected additional tax revenues. He said this shows the relationship between what is being borrowed and what can be afforded. He said the gap represents a shortfall of the town's tax increment using conservative assumptions on tax values, and this exists until 2030. He reviewed the Major Revenues Schools and County slide, and said the numbers under each phase represent the annual tax increment expected by the County under the development scenario at the current tax rate. He said the impact on schools is based on the number of multi-family housing units being built, and it is anticipated to equal $1.9 million in additional fees. He said the school property tax at the current tax rate is anticipated to be $549,000 after complete build out. Kenneth Pennoyer said the proposed County participation is to contribute a portion of the tax increment, or additional taxes generated from the development, not to exceed $400,000. He noted that the tax increment will be smaller in the early years. He said the town is looking to use its debt service fund in the interim to pay the differences between the increment available and the actual debt. He reviewed the Projected County Tax Increment graph and said the full tax increment over the 20 years would be about $7.3 million, and the net tax increment after paying the debt service, would be $24 million. Kenneth Pennoyer said the final 20 Year Cost Benefit Comparison slide shows how the County increment provides the opportunity to match debt service with tax increment 10 years