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Study: Tolles Garden project shows $3.1M funding gap; TIF NPV roughly equals shortfall
Summary
The advisory-board packet included a needs analysis and economic-impact study estimating a roughly $3.11M funding deficit for the Tolles Garden 141-unit project; projected TIF rebate cash flows (net present value) are roughly $3.0M, a figure staff and developers said would help close the gap.
Maxwell, Hendry & Simmons analyst Matt Simmons presented the advisory board with the project’s needs-analysis highlights and an economic-impact estimate.
Simmons said construction-phase activity is expected to support about 310 jobs and the combined construction and first-seven-year operations impact is about $88.5 million. He told the board hard costs average about $256,000 per unit and that projected net sales proceeds are roughly $33.0 million; total development costs were presented as about $53.4 million, yielding a deficit of approximately $3.11 million.
On the revenue side, Simmons said the sum of annual TIF rebate payments available to the project is just under $5.7 million and that, when discounted over an 18-year payout at a 6.5% rate, the net present value of that stream is just over $3.0 million—near the funding shortfall. "The sum of payments essentially that are available for rebate is just under 5,700,000," he told the board, and later: "the net present value is just a touch over 3,000,000."
Simmons and the developer explained the TIF rebate would be paid out over time (not a lump sum) and that the larger capital stack includes private equity, construction financing and the pending CDBG-DR grant. Board members asked about cost-benchmarking and the analyst said cost estimates were validated with third-party benchmarks and cost quotes.
