Fiscal Note
This resolution would authorize two end-loans, disbursed to two separate borrowers upon completion of their respective projects, in the aggregate amount of $3,106,000 for the development of apartments and a parking structure (“Apartment Project”) and an office building (“Office Project”) on the former Erdman property located at the southwest corner of University Avenue and Whitney Way. The two end-loans would be repaid through incremental taxes generated by the Apartment Project and Office Project and, in aggregate, represent approximately 62% of the present value of all incremental taxes anticipated from the Apartment Project and Office Project throughout the 27-year life of TID #41, created on September 6, 2011. This requires an exception to the 50% Rule in City of Madison TIF Policy.
Funds to capitalize this loan would require authorization in the 2013 Capital Budget, funded with internal borrowing or general obligation debt. While it is anticipated that the incremental taxes generated by each Project will be sufficient to repay their respective loans within approximately 10 years, both Borrowers are required to guarantee a minimum payment on their respective loan if sufficient future tax increment is not available.
The Apartment Borrower is also obligated to return an equity participation payment equal to either nine percent (9%) of the gross selling price of the Property, including improvements thereon, on the day of sale or nine percent (9%) of the assessed valuation of the Property, including improvements thereon on September 6, 2038 whichever occurs first, in an amount not to exceed $2,019,000. The Office Borrower is also obligated to return an equity participation payment equal to either seven percent (7%) of the gross selling price of the Property, including improvements thereon, on the day of sale or seven percent (7%) of the assessed valuation of the Property, including improvements thereon on September 6, 2038 whichever occurs first, ...
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