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Additional Payments to the City
<br />At the May 29 work session, staff provided information on potential guaranteed payments
<br />Core Campus could make to the City in excess of the land property tax during years six
<br />through ten. The payments total $955,000 and could be directed to an affordable housing
<br />fund.
<br />
<br />Below is the 10-year pro-forma with the MUPTE and the additional payments to the City
<br />that was presented at the May 29 work session. The average cash on cash return for the
<br />10-year period is 9.7%.
<br />
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<br />With MUPTEYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
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<br />
<br />Income$ 4,649,100$ 4,695,600$ 4,742,500$ 4,790,000$ 4,837,900$ 4,886,200$ 4,935,100$ 4,984,500$ 5,034,300$ 5,084,600
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<br />
<br /> - Vacancy$ 232,500 $ 234,800 $ 237,100 $ 239,500 $ 241,900 $ 244,300 $ 246,700 $ 249,200 $ 251,700 $ 254,200
<br />
<br /> = Effective Gross Rent$ 4,416,600$ 4,460,800$ 4,505,400$ 4,550,500$ 4,596,000$ 4,641,900$ 4,688,400$ 4,735,300$ 4,782,600$ 4,830,400
<br />
<br />
<br /> - Operating Exp$ 1,413,300$ 1,427,500$ 1,441,700$ 1,456,200$ 1,470,700$ 1,485,400$ 1,500,300$ 1,515,300$ 1,530,400$ 1,545,700
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<br /> - Property Tax
<br />$ (449,000)$ (462,500)$ (476,400)$ (490,700)$ (505,400)$ (520,600)$ (536,200)$ (552,300)$ (568,900)$ (586,000)
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<br />(saved by MUPTE)
<br />
<br />$ - $ - $ - $ - $ - $ 30,000$ 60,000$ 140,000 $ 250,000 $ 475,000
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<br /> - Add'l Pymt to City
<br />
<br /> = NOI$ 3,452,300$ 3,495,800$ 3,540,100$ 3,585,000$ 3,630,700$ 3,647,100$ 3,664,300$ 3,632,300$ 3,571,100$ 3,395,700
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<br />
<br /> - Debt Service$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522$ 2,491,522
<br />
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<br /> = CF$ 960,778 $ 1,004,278$ 1,048,578$ 1,093,478$ 1,139,178$ 1,155,578$ 1,172,778$ 1,140,778$ 1,079,578$ 904,178
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<br />Cash on Cash Return 8.7%9.1%9.5%9.9%10.4%10.5%10.7%10.4%9.8%8.2%
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<br />Staff continues conversations with Core Campus about alternative “additional payment”
<br />scenarios. Staff will provide updated information to council as it becomes available.
<br />
<br />Councilor Zalenka inquired about a mechanism to (a) ensure that the proposed later-year
<br />payments are paid and (b) obtain a guarantee from the Core Campus parent company.
<br />Council could require such a guarantee from the company by adding the guarantee as a
<br />condition of approval to the MUPTE resolution; such a condition could make the entire
<br />MUPTE conditional on the execution of a guarantee agreement with the parent company.
<br />Such a guarantee, however, should not be necessary to ensure payment since continuation
<br />of the MUPTE would be conditioned on each of the payments in the later years. For
<br />example, should Core Campus fail to make the proposed $30,000 year six guaranteed
<br />payment, Core Campus would not receive the tax exemption for that year and would
<br />instead pay property taxes on the improved value to the site (estimated tax of $520,600).
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