HomeMy WebLinkAboutMidtown Apartments, LLC - Analysis July 2017Midtown
Apartments,
LLC
Tax
Increment
Analysis
July
20,
2017
Prepared
by:
Andy
Parks,
CPA
Leland
Consulting/GEL
Oregon,
Inc.
on
behalf
of
the
City
of
Bozeman
Economic
Development
Department
Summary
Applicant
plans
to
build
9
unit
apartment
complex
on
property
currently
occupied
by
an
older
home.
Applicant
intends
to
invest
approximately
$1.64
million
and
is
requesting
$148,222
from
the
Agency.
The
following
schedule
summarizes
our
findings
of
our
analysis.
Estimated
costs
to
complete
project 1,673,981$
2017
Market
value
per
assessor 294,000
Net
estimated
increase
in
value 1,379,981
Estimated
net
increase
in
taxable
value 26,082
TIF
tax
rate
-‐
estimated
-‐
FY
2019 653.53
Estimated
incremental
taxes
(TIF)
-‐
annual
17,045
TIF
investment 148,222
Per
application
ROI
-‐
estimated 11.5%
Estimated
payback
period
9
years assumes
4%
interest
rate
on
advanced
amount
Private
investment
to
public
investment
10.294
Metric:
Greater
than
8
to
1
-‐
commercial
Greater
than
5
to
1
-‐
family
wage
jobs
Assumptions
Cost
and
timing
information
provided
in
application
-‐
except
construction
financing
which
is
estimated
Estimated
start
date
Sep-‐17
Estimated
completion
per
application
is
8
months Apr-‐18
Increase
in
property
taxes
applicable
fiscal
year
2019
Construction
Interest
-‐
estimated
12
month
construction
loan
rate 5.49%
Current
property
taxes 2,344
Estimated
Project
Valuation
-‐
Cost
Approach
Construction
Financing
Project
Costs Amount
Beg
Month
Ending
Month
Months
of
Interest
Estimated
Interest
Demolition 41,365
-‐
1
8
2,271
Building
construction 1,369,475
1
8
4
25,061
Parking
construction 27,250
8
8
1
125
Landscaping 18,000
8
8
1
82
Design/engineering 77,000
-‐
1
8
2,818
Water
and
fire
line 17,704
1
2
7
567
Storm
water
system 33,628
1
2
7
1,077
Park-‐land
(cash
in
lieu)12,864
-‐
1
8
471
Impact
fees 42,661
-‐
1
8
1,561
Project
financing
costs 34,034
34,034
Estimated
cost
to
complete 1,673,981
Note:
We
did
not
include
mortgage
payoff
or
value
of
demoed
house
in
the
Cost
Approach.
Agency
has
requested
analysis
to
determine:
Return
on
Investment
(ROI),
Estimated
payback
period
and
metrics
related
to
private
to
public
sector
investment
note:
rate
included
in
Loan
Commitment
Letter
http://gis.gallatin.mt.gov/common/parcel_infor
mation.aspx?tab=taxcode&taxID=RGG3097&geoc
odeid=06079801405070000
Greater
than
10
to
1
-‐
desired
for
multi-‐family
Property
valuation
is
limited
to
the
cost
approach,
i.e.,
cost
to
complete
project
-‐
real
market
value
will
likely
differ.
Different
valuation
methods
include
but
are
not
limited
to;
income
approach,
sales
comparisons,
and
Capital
Asset
Pricing
Model.