Fiscal Note
The proposed resolution amends the Economic Development Division's 2024 Adopted Capital Budget to appropriate $1,669,000 in TID-supported GO Borrowing in Tax Incremental District (TID) 54 (Pennsylvania Ave). The additional funding will be used for a loan in the amount of $1,669,000 to Vermillion Madison LLC, or its assigns ("Developer") to close a funding gap in the proposed development ("Project") attributable to sanitary sewer upgrades and associated costs to accommodate increased capacity required by large, multi-family residential development, such that, but for TIF assistance, the Project could not occur. This TID funding is also contingent upon an amendment of the TID 54 (Pennsylvania Ave.) boundary ("Property") in 2024.
This resolution further authorizes the 0% interest $1,669,000 loan to Vermillion Madison LLC, or its assigns ("Developer"). The TIF Loan would be repaid through incremental taxes generated by the Project and represents 15% of the present value of all incremental taxes anticipated from the Project over the proposed TID’s 27-year life. While it is anticipated that the incremental taxes generated by the Project will be sufficient to repay the loan within approximately 5 years, the Developer is required to guaranty a minimum payment if sufficient future tax increment is not available.
The increment guarantee is secured by a subordinated mortgage on the property. The TIF Loan also requires that the Developer be prohibited from selling or transferring the Property prior to repayment of the TIF Loan. If the Developer sells or transfers the Property to a tax-exempt entity ("Buyer"), the Buyer shall pay an annual payment in lieu of taxes (PILOT) in the amount of the property tax paid as of the date of sale, frozen, until 2051.
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SUBSTITUTE Authorizing the Mayor and City Clerk to execute a development agreement and authorizing an amendment to the 2024 Capital Budget to fund a $1,669,000 Tax Incremental Finance Loan to Vermillion M...
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