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HomeMy WebLinkAboutAgenda - Mail Packet - 11/22/2016 - Urban Renewal Authority (Ura) Meeting Agenda - November 21, 2016Finance Administration 215 N. Mason 2nd Floor PO Box 580 Fort Collins, CO 80522 970.221.6788 970.221.6782 - fax fcgov.com AGENDA URA Meeting November 21, 2016 11:40 am - 12:30 pm CIC Room - City Hall 1. URA Update on North College, Prospect South and Mall Districts 30 mins J. Birks 2. Lyric Theater Assistance 20 mins J. Birks URBAN RENEWAL AUTHORITY FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Josh Birks, Economic Health Office Director Patrick Rowe, Redevelopment Program Coordinator Date: November 21, 2016 SUBJECT FOR DISCUSSION Urban Renewal Authority Annual Update EXECUTIVE SUMMARY The purpose of this item is to provide an annual Urban Renewal Authority (URA) update. The update focuses on the three tax increment financing (TIF) districts in addition to the broader authority. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED • Does the committee have input or comment on the proposed 2017 URA strategies? BACKGROUND/DISCUSSION The Fort Collins URA is comprised of two plan areas –the North College Plan Area and the Midtown Plan Area – and three TIF districts which reside within the two plan areas –the North College TIF district, the Prospect South TIF district, and the Foothills TIF district (Attachment 1 & 2). The URA derives property tax increment from all three districts in addition to sales tax increment from the Foothills TIF district, with increment proceeds obligated and spent within each respective district. 2016 – Fort Collins URA With the dramatic reduction in the size of the Midtown Plan Area that was undertaken in late 2015 in response to the URA Reform Bill (House Bill 2015-1348), no new plan areas, and with the North College TIF/Plan Area drawing nearer to its 25-year term, in general the URA saw a continued low level of new activity. That said, staff continues to look for appropriate new plan area opportunities (the former Kmart site is one such area that drew interest and consideration in 2016). North College TIF District The North College TIF District was formed in 2005, with its first collection in 2006 and its last scheduled collection in 2031. Activities: • URA Applications o Hickory Commons – An industrial and live-work development consisting of two (2) 11,000 square foot industrial buildings and one (1) 7-unit live/work condo building. The URA provided support of up to $74,211 for regional stormwater improvements (approved late 2015) o Lyric Cinema Café – Relocation and expansion of the Lyric Cinema Café to 1209 N. College Ave. The expanded Lyric Cinema will feature three screens, 500 seats, a full restaurant, and a bike-in outdoor venue. The Lyric is seeking $209,000 in URA support to apply towards stormwater improvements and landscaping (Pending; URA Finance Committee review for November 21, 2016). • Redevelopment Agreement Compliance o Aspen Heights – Actively reviewing invoices and documentation of eligible expense prior to beginning reimbursement (awaiting final submittal from developer/owner) o Rocky Mountain Innosphere – Engaged in finalizing staff review of eligible expenses with the aid of outside expertise in preparation of the refinancing to take place in early 2017 Strategies: • Finish Strong North College – At nearly half term, the value of the Tax Increment Financing (TIF) revenue stream is diminishing, making significant investment in renewal projects more challenging. As such, the URA wants to optimize the use of TIF during the remaining life of the plan area to address remaining blight conditions and redevelopment opportunities. Staff proposes engaging with an economic development / planning consultant to develop a strategic investment plan for the URA North College Plan Area. Specifically, this would involve examining infrastructure deficiencies, other development constraints, and catalytic/high value investment opportunities. • North College West Side Regional Stormwater – The east side of North College Avenue has employed a regional detention and water quality approach (the Northeast College Corridor Outfall) that supports development outcomes in the area. The west side of North College currently lacks a regional approach and arguably has greater challenges given the smaller average lot sizes and long-narrow lot configuration. Staff is presently exploring the potential of a regional detention and water quality approach that is similar to that on the east side. If the City’s internal analysis indicates value in such an approach, staff may recommend using some portion of URA funds to support additional planning of such an approach. • EPA Site Assessment Grant – The City received an Environmental Protection Agency grant in the amount of $500,000 for environmental site assessment work in support of redeveloping brownfield sites. This grant has been targeted for the North College area as well as the northern periphery of Old Town. City Staff is actively seeking private participants to make use of this grant in support of redevelopment outcomes and environmental cleanup. The City has use of this grant until fall 2018. Financial Highlights/Summary: 2016 Budget 2017 Budget 2017 H/(L) 2016 Revenues $ 1,537,520 $ 4,055,709 $ 2,518,189 Operating Expenses $ 286,133 $ 287,503 $ $ 1,370 Debt Service $ 1,078,461 $ 3,580,600 $ 2,502,139 Total Expenses $ 1,364,594 $ 3,868,103 $ 2,503,509 North College District Comparison of 2016 Budget with Current 2017 Budget • Tax increment collections continue to show modest increases as forecast. • 2017 includes the anticipated Rocky Mountain Innosphere loan repayment, which in turn will be applied to the loan the City made to the URA for the same purpose. • Positive fund balance throughout the life of the district sufficient to discharge all planned obligations and debt service. Prospect South TIF District The Prospect South TIF District was formed in 2012, with its first collection in 2013 and its last scheduled collection in 2038. Activities: • URA Applications o 2105 S. College (proposed – withdrawn) – A market rate apartment project proposed for a site located just north of Whole Foods. Size of increment request and market rate aspect of project resulted in staff recommendation of greater public benefits or reduced increment request • Redevelopment Agreement Compliance o Capstone – Distributed the final reimbursement payment in mid-2016 based on leasing activity and other performance aspects of the redevelopment agreement Strategies: • Continued Engagement (Property Owners/Developer Community) – Staff will continue to engage with the brokerage and developer community – with an emphasis on under-utilized property and recent retail transfers – in order to be opportunistic and engage in development outcomes consistent with City plans and policy. Financial Highlights/Summary: • Tax increment collections continue to show modest increases as forecast. • Fund balance projection in 2016 is $217,034. The fund balance remains positive throughout the life of the district sufficient to discharge all obligations and debts. 2016 Budget 2017 Budget 2017 H/(L) 2016 Revenues $ 450,185 $ 463,312 $ $ 13,127 Operating Expenses $ 20,759 $ 23,259 $ 2,500 Debt Service $ 365,102 $ 369,551 $ 4,449 Total Expenses $ 385,861 $ 392,810 $ 6,949 Prospect South District Comparison of 2016 Budget with Current 2017 Budget Foothills TIF District The Foothills TIF District was formed in 2014, with its first collection in 2015 and its last scheduled collection in 2040. Activities: • Pedestrian Underpass – Staff continued to work with the developer to finalize design, construction timing, and manage cost overruns for the project • Monitoring Leasing Activity – Staff met with the developer periodically throughout the year to discuss leasing activity and review construction progress – the last building on site (excluding the residential) is under-construction now • Redevelopment Agreement Compliance – Working with outside consultant to ensure sustainability and other agreement requirements are complied with. Report will be produced upon completion of project. Financial Highlights/Summary: • The Foothills TIF district acts as a pass-through entity for the funds it collects. • A modest administrative charge will be withheld from property tax increment to offset staff and administrative costs to the Urban Renewal Authority ATTACHMENTS 1. Location Map – North College Urban Renewal Plan Area 2. Location Map – Midtown Urban Renewal Plan Area 3. Staff Presentation 2016 Budget 2017 Budget 2017 H/(L) 2016 Revenues $ 1,139,145 $ 4,078,120 $ $ 2,938,975 Operating Expenses $ - $ 13,979 $ $ 13,979 Debt Service $ 1,139,145 $ 4,053,867 $ 2,914,722 Total Expenses $ 1,139,145 $ 4,067,846 $ 2,928,701 Comparison of 2016 Budget with Current 2017 Budget Foothills District 1 Urban Renewal Authority – 2016 Annual Update Josh Birks and Patrick Rowe November 21st, 2016 North College TIF District 2 North College - Activities • Applications • Hickory Commons (approved late 2015) • Lyric Cinema Café (pending) • Redevelopment Compliance • Aspen Heights • Rocky Mountain Innosphere • North College West Side Regional Stormwater • Environmental Protection Agency Environmental Site Assessment Grant 3 North College - Strategies • Finish Strong North College • North College West Side Regional Stormwater • Environmental Site Assessment Grant (2-years remaining) 4 5 2016 Budget 2017 Budget 2017 H/(L) 2016 Revenues $ 1,537,520 $ 4,055,709 $ 2,518,189 Operating Expenses $ 286,133 $ 287,503 $ $ 1,370 Debt Service $ 1,078,461 $ 3,580,600 $ 2,502,139 Total Expenses $ 1,364,594 $ 3,868,103 $ 2,503,509 North College District Comparison of 2016 Budget with Current 2017 Budget Note: Revenue and debt service increased substantially from 2016 due to anticipated RMI loan repayment. North College – Financial Highlights North College – Financial Highlights • Increment collections show modest or slightly better increase as forecasted (1% annual increase) • 2017 Rocky Mountain Innosphere Repayment • Existing positive fund balance • Cash flow sufficient to meet outstanding obligations 6 Prospect South TIF District 7 Prospect South – Activities/Strategies • Applications • 2105 S. College (proposed-withdrawn) – Market rate apartments proposed on site immediately north of Whole Foods. • Redevelopment Compliance • Capstone • Strategies • Continued Engagement with TIF District property owners and developer community 8 9 2016 Budget 2017 Budget 2017 H/(L) 2016 Revenues $ 450,185 $ 463,312 $ $ 13,127 Operating Expenses $ 20,759 $ 23,259 $ 2,500 Debt Service $ 365,102 $ 369,551 $ 4,449 Total Expenses $ 385,861 $ 392,810 $ 6,949 Prospect South District Comparison of 2016 Budget with Current 2017 Budget Prospect South – Financial Highlights Prospect South – Financial Highlights • Increment collections show modest or slightly better increase • City share-back • Existing positive fund balance • Cash flow sufficient to meet all outstanding obligations 10 Foothills Mall TIF District 11 Foothills – Activities • Pedestrian Underpass • Monitoring Leasing Activity • Redevelopment Agreement Compliance 12 13 2016 Budget 2017 Budget 2017 H/(L) 2016 Revenues $ 1,139,145 $ 4,078,120 $ $ 2,938,975 Operating Expenses $ - $ 13,979 $ $ 13,979 Debt Service $ 1,139,145 $ 4,053,867 $ 2,914,722 Total Expenses $ 1,139,145 $ 4,067,846 $ 2,928,701 Comparison of 2016 Budget with Current 2017 Budget Foothills District Foothills District – Financial Highlights 14 COLLEGE DRAKE PROSPECT HORSETOOTH REMINGTON STOVER SWALLOW STUART CENTRE COLUMBIA MCCLELLAND MEADOWLARK STANFORD RESEARCH MONROE MATHEWS COLONY CENTER SPRING PARK STOVER COLONY Foothills Mall Foothills TIF District I Prospect South TIF District Streets Fort Collins Urban Renewal Authority Midtown Plan Area COLLEGE WILLOX VINE MOUNTAIN LINCOLN 287 LAPORTE HOWES MASON COUNTRY CLUB JEFFERSON SUNIGA TERRY LAKE CONIFER REDWOOD CHERRY LINDEN HICKORY WILLOW BUCKINGHAM JEROME WALNUT North College Plan Area / TIF District Streets I Fort Collins Urban Renewal Authority North College Plan Area COUNCIL FINANCE COMMITTEE AGENDA ITEM SUMMARY Staff: Josh Birks, Economic Health Director Patrick Rowe, Interim Redevelopment Project Coordinator Date: November 15, 2016 SUBJECT FOR DISCUSSION North College Urban Renewal Authority TIF Application – Lyric Cinema EXECUTIVE SUMMARY The Lyric Cinema Café (applicant) located at 300 E. Mountain Avenue proposes to relocate to 1209 N. College Avenue a location within the North College Tax Increment Financing (TIF) District. The applicant wishes to expand and construct a new theater facility. The applicant has submitted an application requesting tax increment financing (TIF) assistance to enable the project to occur. The application requests $209,000 from the North College TIF district. If approved, the TIF would be provided as a reimbursement for stormwater improvement costs (including a detention pond) and landscaping costs. The TIF assistance would be paid out over time based on actual increment collected from the project, in keeping with URA policy. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does the URA Finance Committee concur with staff’s recommended reimbursement approach (terms and timeline)? 2. Does the URA Finance Committee have questions, comments, or concerns that should be addressed before this item is presented to the URA Board? BACKGROUND/DISCUSSION The Fort Collins URA received an application for TIF assistance from the owner/operator of the Lyric Cinema Café requesting support of a proposed relocation of the Lyric Cinema Café to 1209 N. College Avenue (Attachment 1, Location Map). The proposed development is located on a vacant parcel of land that is approximately 1.6 acres in size. The development will consist of a 10,000 square foot cinema center with a full restaurant and a bike-in outdoor theater venue. It will grow the Lyric from a 135 seat capacity theater to a three screen 500 seat capacity theater. The TIF request is for a maximum of $209,000 for the reimbursement of costs related to stormwater and landscaping improvements as follows: Eligible Cost Amount Stormwater Improvements (including detention pond) $149,603 Stormwater Contingency (10%) $14,960 Landscaping $44,437 TOTAL $209,000 Tax Increment Summary The information below is derived from a Larimer County Assessor’s Office estimate of the increment to be generated. Estimated Annual Property Tax Increment* $38,981 Total Increment Generated Over District Life $506,755 Requested TIF $209,000 Requested TIF as percentage of estimated generated TIF 41.24% *The estimate of annual property tax increment was provided by Larimer County Financial Review (“But-For” Analysis) The URA engaged a third party financial review firm to evaluate the applicant’s financials and perform analysis to evaluate the need for URA support. The analysis undertaken by Economic and Planning Systems, Inc. (EPS) concluded an ROI without TIF assistance of 9% and an ROI with TIF assistance of 10%. It should be noted that these returns are based on a lower theater occupancy assumption than what the applicant provided to the URA. This lower occupancy assumption is supported by recent market analysis that EPS conducted in Lincoln, NE and is in keeping with EPS’s expectations of a reduction in occupancy as the theater grows from 135 seats to 500 seats. Additionally, the applicant’s bank has represented and provided letter documentation indicating that the URA funds are critical to the applicant’s loan application. Project Benefit Staff recognizes a number of benefits in enabling the Lyric Cinema Café project and would highlight the following: • Development of a challenging site that is located within a challenging development area. Several challenges relate to stormwater, access limitations, and the site’s grade relative to adjacent property. • Development of the site and the installation of stormwater improvements and the dedication of rear access can benefit future developments in the immediate area. • Unique and creative destination in North College that has the potential to draw new interest to the area. • Expansion of a local business, resulting in new employment, commerce and activity in the area. City Plan, EH 1.1. Supports Job Creation The project grows an existing business and will result in additional job creation. City Plan, Principle EH 3: The City will support local, unique, and creative businesses. The business is a unique, creative, and local and many would argue an important destination in Fort Collins. North College Urban Renewal Plan, LU 2.1 Complementary Uses. Different attractions ‘across the river’. The project has a great potential to provide an attraction to the area. North College Urban Renewal Plan, FAD 2.1 Seek Leverage Opportunities. Set the state for additional development. In addressing site conditions for stormwater and making a dedication of right-of-way for the Mason Street alignment, the project is facilitating future development. Proposed Terms The following TIF assistance structure is proposed: • Assistance will be provided as a reimbursement upon project completion for up to $209,000 of eligible costs. The property owner must submit appropriate documentation to verify such costs were incurred. • The reimbursement will be paid over time based on actual tax increment collected from the project. • The URA will pay 65% of the annual increment collected to the property owner each year, until the reimbursement obligation is paid in full or expiration of the TIF district, whichever occurs first. ATTACHMENTS Attachment 1 – Location Map Attachment 2 – Application (key parts) Attachment 3 – EPS Financial Report Attachment 5 – Presentation COLLEGE HICKORY CONIFER JEROME Parcels selection Streets I Lyric Cinema Cafe Location Map URA Executive Summary What is the nature of the Project? The Lyric wants to move and expand its facilities to 1209 N College Ave in order to meet the demand of the current business and make the Lyric into a more versatile community cultural hub for Fort Collins. We will grow from a small (3600 sq.ft.) twin theater with a limited café and 135 seat capacity to a 10,000 sq.ft. three screen cinema center with a full restaurant, 500 seat capacity theater, and bike-in outdoor venue. We believe this will bring a much needed revitalization to north College. The Lyric wants to serve as a neighborhood hub and connection place for an underserved population, as well as creative center that encourages a new approach to entertainment and dining in Fort Collins. Why is TIF needed; how will fund be used? TIF funds are need for this project due to the complexities of the lot and to secure financing for the project. The developable land available on this lot is restricted by three easements, cutting off the back of the lot and bifurcating it in half. This has provided sufficient challenges to development in the past. So much so that the lot has been abandoned for development twice now. Our project works with these restrictions to provide the highest and best use of the land according to our independent appraisal. Financing for medium sized projects like this has also become difficult to secure due to increased collateral needs and the conservative nature of banking. The Lyric, though enjoyed by many in Fort Collins, has been limited in it’s earning capacity by the current location, so in order to grow to a more sustainable model, we need assistance from private investors and government entities. I would like to apply for 50% of the total, making it $209,000, and use those funds to pledge to Great Western Bank as collateral for our loan. Instead of the TIFF payments going back to 1209 N College LLC, we would sign over the proceeds to the bank in order to pay down the principal on the loan. Great Western is counting on this backing for their loan approval, and if denied I will have to secure another source for this collateral. We would use these funds for items including: INFRASTRUCTURE $149,000 for the stormwater drainage and detention pond FAÇADE IMPROVEMENTS: Our design and materials for this building are intended to work in line with the cities desire for a “unique” and “funky” aesthetic on North College, as per the North Corridor plan from 2007. With $79,000 in architecture design costs and an extra $30,000 in added material costs for custom siding, over what the base price for siding is, with an additional $100,000 for the tower, I would like to ask for the URA to consider covering 23% of that cost with a $50,000 contribution to the aesthetic appeal of the development. ADDITIONAL CONSIDERATIONS On top of the detention pond providing storm water detention and drainage for our lot and neighboring lots, it will also serve as a community gathering space and natural area for wildlife migration. Our landscaping will be intended to aid in these two things. At $80,000 for the landscape we would ask council to consider this as a great neighborhood benefit and in line with URA goals and the existing sub- area plan. What other sources of financing with the project secure other than TIF? 1209 N College LLC has raised $600,000 from cash investors. With those funds we purchased the lot and designed the building. Great Western Bank has approved this project for a $2.5 million loan with the following collateral: -$1,000,000 cash collateral in a holding account from a private investor. -$250,000 cash collateral from CHFA -$209,000 in TIFF -Co-signing from the Mozer’s and Jim Schafer An additional $500,000 in cash equity from The Lyric, raised the selling Lyric Shares. Project Total: $3.6 million with $1,459,000 in collateral, plus $2.9 million appraisal value. How will the project help improve/upgrade infrastructure? The primary infrastructure improvement to North College provided by this project is the detention pond and storm water drainage. This pond will help the lots to the north and west with their storm water as well. Additionally, we will bring in utilities such as water, electric, sewage and fire-line to a vacant lot. This will help with city infill and neighborhood development. How will the property enhance the property tax base? Appraised at $2.9 million, this development will provide a significant property tax base for this lot, and become one of the most high usage developments on North College. Which will, in turn, increase the tax base of surrounding properties. On top of property tax, The Lyric will contribute significant sales tax to the City of Fort Collins, with a revenue increase of 100%-500%, grossing $1-5 million annually. This Increase in traffic and creative business use will co-locate to the area. We are also creating a retail corner on the College and Hickory, along with Jax, that will help create pedestrian traffic and neighborhood connections, in alignment with city plan intentions. How will the project help achieve goals of the URA and city plan? In the North College Corridor Plan from 2007 the city sites “the importance of a major retail destination or other attraction such as a theater, which could attract people from a larger area beyond the identified trade area.”(North College Corridor Plan pg. 26) This is specifically applicable to us. -The “old town feel” that we will bring by moving up north was also referred to several times in that same plan. The City also calls for “development of flood-proofed revenue-generating attractions, such as restaurants with decks or patios.” (North College Corridor Plan pg 30) As far as our design, there are multiple examples in Corridor plan that site “funky” spaces, creative uses and water detention for out outdoor bike in theater that fit squarely in the city’s vision. We also fill the URA’s need to decrease blight because of our aesthetic design and pedestrian use. We follow the 2015 legislative priorities by “Encouraging redevelopment rather than sprawl” as well as create “Livable community planning” and encourage alternative transit with our bike in movie screen and access to the bike path as well as Redwood St. Other objectives include: North College Urban Renewal Plan Policy GM-8.1—Redevelopment/Infill will improve to job access, increase economic activity in the area to benefit existing residents and businesses and, where necessary, provide the stimulus to redevelop, including underutilized land, areas already undergoing positive change, which is expected to continue along travel corridors. North College Infrastructure Plan, 23 NCDID - West side drainage system. North Corridor Plan HWY 1.2 - Part of a Whole Approach—Developing and establishing a unique identity, linking functional and aesthetic improvements. HWY 1.4 - Image and Identity for the Corridor—Design enhancement opportunities – HWY 1.5 - Drainage. CAD1.1 - Design Influences. Highway streetscape improvements to celebrate the colorful history of this stretch of US-287. CAD 2.1 - Architecture will be the primary, most visible means of achieving the city goals. CAD 2.2 - Character will be contemporary semi-industrial, combined with familiar, traditional character. Durable, simple, authentic materials and design will be prevalent. LU 2.1 - Complementary Uses. Development in the North College corridor will support Downtown with jobs and housing bringing residents and workers; will add different attractions ‘across the river’ for people who come Downtown, as Jax Outdoor (across the street) does. Improve the attractiveness of Fort Collins for travelers and visitors, will accommodate expansion of Downtown arts uses, especially with supporting custom small industry and workshop space. LU 3.1- .The City and URA will encourage multi-story buildings, and additional height in one-story buildings, in development projects. FAD 2.1 - Seek Leverage Opportunities. Continuously seek and find ways to improve exceptional, image- changing locations by making transportation and drainage improvements; this sets the stage for additional development and public improvement projects to fill in gaps. City Plan EH 1.1 – Support Job Creation EH 3.1 – Support Programs Emphasizing Local Business EH 3.2 – Define and Support the Uniquely Fort Collins Cluster EH 3.3 – Support Local and Creative Entrepreneurship ENV 1.1 – Protect and Enhance Natural Features—Pond is wetland preservation ENV 5.4 – Support Renewable Energy in New Development ENV 6.5 – Offer Incentives—Energy efficiency standards LIV 6.2 – Seek Compatibility with Neighborhoods LIV 6.3 – Encourage Introduction of Neighborhood-Related, Non-Residential Development CPR 1.1 - Provide a Mix of Cultural Facilities and Programs Policy CPR 2.1 - Promote Visibility of the Arts and Culture Policy CPR 2.2 – Build Identity How would the project eliminate slum and blight? The Lyric will help infill development and increase city foot traffic for North College and specifically: -Deteriorated site or other public infrastructure – the plan notes the lack of an adequate, coordinated drainage system, which this project will help to correct -Inadequate public improvements or utilities – the project contributes to the creation of an adequate drainage system and functional street network -Substantial physical underutilization or vacancy of sites – the fact that this site remains vacant in an otherwise urban area qualifies as helping to remediate this issue. How will the project achieve the URA goals of sustainability through green building techniques? The Lyric will comply with the city’s Green Building Codes, including LED light fixtures and energy efficient HVAC. We will also maintain wetland and wildlife thoroughfares with our detention pond and landscaping. Sustainability is very important to the owners, and as a long term goal, we want to see the Lyric break new ground for how to make a movie theater a sustainable endeavor. But due to budget constraints we have to limit our scope in the initial phase. What is the proposed timetable? Final proposal will be submitted on Aug. 17th with building permit submittal to follow within two weeks. Financing is waiting on approval from the URA and if approved, construction should start in October, with a completion date in July of 2017. M EMORANDUM To: Patrick Rowe, City of Fort Collins Urban Renewal Authority From: Dan Guimond and Elliot Kilham, Economic & Planning Systems Subject: Lyric Theater TIF Application Review; EPS # 143002 Date: November 14, 2016 This memorandum summarizes Economic & Planning System’s (EPS) review and analysis of the Lyric Theater Tax Increment Financing (TIF) Application. EPS is under contract with the City to evaluate the financial need and reasonableness of TIF requests to the Fort Collins Urban Renewal Authority (URA). Introduction The Lyric Theater, an independent movie theater currently located on 300 East Mountain Avenue, plans to move to a new location on 1209 North College Avenue, within the North College Urban Renewal Area (URA). The move would allow the theater to grow from a small, 3,600 square foot and 135 seat twin theater with a limited café to a 10,000 square foot and 500 seat three screen theater with a full-service restaurant. To help complete and secure financing for the project, the Lyric applied in TIF funding from the URA to pay for stormwater infrastructure, including drainage improvements and a detention pond, landscaping around the detention pond, and façade upgrades to the theater. EPS reviewed the TIF application against the market and financial requirements and guidelines in the City’s URA policy and projected cash flows, TIF revenues, and project returns. The memo provides analysis on the qualification of the proposed TIF reimbursement based on URA guidelines and policy, the reasonableness of revenue and cost projections in comparison with the market, and the impact that TIF funding has on project returns. The financial portion of the analysis focuses on whether the project requires public financial support to be feasible. This type of analysis is often referred to as a “but for” analysis – a short hand for a determination that “but for” the public financing requested the project could not be feasibly completed. Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 2 14002 – Lyric Theater TIF Review Memo Lyric Theater Development The Lyric Theater proposes to move from its current location near downtown to a new location on North College Avenue, within the North College URA boundary. Figure 1 shows the location of the proposed development relative to the URA boundary. The move will allow the theater to expand to 10,000 square feet and include the following features: • 500 seat capacity • Full-service restaurant • Bike-in outdoor venue Figure 1 Proposed Lyric Theater Location – 1209 North College Avenue Tax Increment Financing Application Reimbursement The Lyric’s URA Application requests $209,000 in TIF contributions and proposes to use the funds to reimburse costs associated with a detention pond and stormwater improvements, façade improvements to create a “unique and funky aesthetic” on North College Avenue, and additional landscaping for the detention pond to create a “community gather space and natural area.” Table 1 summarizes the costs that the Lyric’s application describes as eligible or potentially eligible for a TIF reimbursement. The total cost for the specified public improvements equals Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 3 14002 – Lyric Theater TIF Review Memo $305,875, which exceeds the Lyric’s request of $209,000. The Application does not make it clear the portion of these three different line items for which the Lyric is requesting reimbursement. Further, only the detention pond and stormwater improvements have an independent construction bid estimate verifying the costs of the improvements. (This is not to say that the other costs are not real, just that they are not clearly documented.) In their application, the Lyric requests an allocation of 50 percent of the project’s TIF increment, which it will receive over time and use to pay down the loan principal. Table 1 Potential TIF Reimbursements Eligibility of Costs Based on the Fort Collins Urban Renewal Authority Policies, the requested costs are eligible for TIF reimbursement. More specifically, the costs fall under the following two considerations: • Infrastructure that is extraordinarily costly to the project and/or serves other development and redevelopment facilitating further improvement in the area. • Public amenities such as parks, plazas, community gather areas and streetscapes to enhance the aesthetics of the area. The detention pond and stormwater improvements are infrastructure that is both costly to the project and likely serves to further development in the larger area. Further, combined with the landscaping, the detention pond creates a public park amenity for community gatherings. While façade improvements are not explicitly mentioned in the URA’s guiding policies, they likely will contribute and enhance the streetscape and aesthetics of the area. (Figure 2 presents an architectural rendering of Lyric’s proposed facades.) In addition to the costs explicitly mentioned in the Lyric’s application, the project would also likely be eligible for additional costs related to site clearance, site acquisition, and land assemblage. The construction budget, provided by the applicant, estimates site preparation costs of approximately $800,000, on top of the costs for the detention pond. This represents 20 percent of total project costs. Description Amount % Total Source Detention Pond and Stormwater Improvements $146,875 48% Hoff Construction bid estimate Façade Improvements $79,000 26% Lyric URA Executive Summary Landscaping $80,000 26% Lyric URA Executive Summary Total $305,875 100% Source: Hoff Construction Bid; Lyric URA Executive Summary; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v3.xlsx]TIF Application Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 4 14002 – Lyric Theater TIF Review Memo Figure 2 Architectural Rendering of Lyric Facades from U |R Architects URA Objectives The Lyric Theater is a project that helps to accomplish many of the goals of the North College URA and the policy objectives set out in the URA’s policy guidelines. In addition to helping to further development through improvements to public infrastructure, the project retains and expands a local business, and creates an amenity that will both help create a sense of place in the area and generate revenue for the City. More specifically, the project accomplishes the following objectives delineated in the URA policies: • “Eliminate blight.” • “Improve public infrastructure (streets, storm drainage, sewer, utilities, etc.) in areas where deficiencies exist.” • “Remove impediments to desired development, e.g., lack of infrastructure, environmental contamination, presence of floodplain, and /or unsuitable soils.” • “Retain, expand or attract businesses for the purpose of improving the City’s economic base as demonstrated by projects that retain jobs, create primary jobs, increase the manufacturing base, etc. • “Create destination locations, including mixed-use projects, which will capture additional revenue to the area.” • “Encourage development projects that enhance the streetscapes and pedestrian experience and improve the vitality of commercial corridors by adding interest and activity.” Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 5 14002 – Lyric Theater TIF Review Memo Project Financial Review Project Costs Based on information provided by the Applicant, including construction bids, EPS estimates a total cost of $4.1 million; this cost includes land acquisition, hard costs, soft costs, and financing costs/fees. Table 2 provides detail on the costs for different aspects of the project, including a detention pond and stormwater improvements that represents the largest percentage of the TIF funding request. The estimate also includes $250,000 in furniture, fixtures, and equipment (FF&E) for fitting-out the theater and restaurant as well as $250,000 in design and entitlement costs. Finally, the financing costs include a 1 percent point or fee on the loan and interest on the construction loan during construction. Table 2 Lyric Theater Construction Costs Focusing solely on the building costs, excluding land, site preparation, stormwater infrastructure and financing, the project costs $204 per square feet. This cost is largely in line with EPS’s expectations of the market and is similar to the commercial construction costs that EPS reviewed for a recent metro district applicant in Fort Collins. When EPS includes site preparation and the stormwater infrastructure, the cost jumps to $300 per square feet or an increase of 50 percent. Such a large increase helps to illustrate the site specific burdens on the project. Description factor Amount % Total Land Land Costs $400,000 10% Hard Building and Site Preparation $2,849,015 69% Site Preparation $807,858 20% Building $2,041,157 50% Detention Pond and Stormwater Improvements $146,875 4% Hard Cost Total $2,995,890 73% Other Costs Design and Entitlements $250,000 6% FF&E $250,000 6% Design and Entitlements $500,000 12% Total Land + Hard + Other $3,895,890 95% Loan Pts 1.0% $25,338 1% Construction Interest 5.0% $194,634 5% Total Costs $4,115,862 100% Source: Hoff Construction Bid; Lyric URA Executive Summary; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v5.xlsx]Construction Costs Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 6 14002 – Lyric Theater TIF Review Memo Cash Flows The Lyric provided a pro forma for EPS’s review. The pro forma presents an optimistic picture of the theater’s future performance. Table 3 summarizes Year 6 revenues and expenses at which time the Lyric expects the theater to gross $1.73 million in ticket revenue, which equates to a 20 percent occupancy rate, the key driver for performance. The projected net operating income is $587,092; this represents a yield of 14 percent, extremely healthy for commercial real estate. Table 3 Stabilized Revenues and Expense in Year 6 A review of the historic operating performance, based on income statements provided by the Lyric, suggests that these projections may be overly optimistic. Since 2011, the Lyric has achieved inconsistent net operating income, including significant losses in 2012 and 2013. Further, when the Lyric did realize a profit, the operating margins were smaller than those projected. EPS normalized the net operating income by total revenue, a measure of profitability that allows for comparison, as shown in Table 4. The highest percentage rate achieved by the Lyric from 2011 to 2015 was 6 percent in 2014; whereas, the Lyric projects a rate of 15 percent in the year of stabilization. As a counter argument, however, the larger theater may create operating efficiencies with certain economies of scale. Description Factor Amount % Total Performance Drivers Total Seats 1,720 Total Seat Days 360 619,200 Occupancy 20% Ticket Price $14 Revenues % Total Revenue Ticket Revenue $1,733,760 45% Restaurant F&B Revenue $963,200 25% Concessions $770,560 20% Merchandise Revenue $77,056 2% Rental Revenue $231,168 6% Ad Revenue $77,056 2% Total $3,852,800 100% Expenses % Total Expense Direct Operating $1,346,554 41% Indirect Operating $1,467,917 45% Fixed Costs $451,238 14% Total $3,265,708 100% % Total Revenue Net Operating Income $587,092 15% Source: Lyrica Pro Forma; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v4.xlsx]T-Revenues and Expenses Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 7 14002 – Lyric Theater TIF Review Memo Table 4 Stabilized Revenues and Expense in Year 6 EPS is also concerned that a stabilized occupancy of 20 percent may be difficult to achieve, resulting in lower project revenues. While the Lyric achieved these rates in 2014 and 2015, the two years for which The Lyric provided EPS these data, it was for a theater one-quarter the size of the proposed new theater (135 seats compared to 500 seats). As a point of reference, a recent market study conducted by EPS of movie theaters in Lincoln, NE shows an average city- wide occupancy rate of 10 to 15 percent between 2009 and 2015. While an inexact market comparison, taken with the increased theater capacity, this range of occupancy is a more conservative and potentially more appropriate occupancy assumption for the pro forma. Even under the optimistic projection scenario presented in the Lyric’s pro forma, cash flows are inconsistent or “lumpy,” especially before project stabilization at Year 6. Figure 3 summarizes EPS’s estimates of the cash flows in the first ten years of the project. Taking into consideration financing costs, EPS projects that cash flows will likely be negative in the early years of the project. While negative cash flows before stabilization are far from abnormal in real estate investments, they do highlight a need for additional capital sources and another potential source of benefit that the TIF provides outside of impacting project returns. Description 2011 2012 2013 2014 2015 Performance Drivers Occupancy --- --- --- 22% 21% Revenue $423,587 $439,589 $437,353 $632,709 $544,008 Expense Direct $174,181 $189,313 163194.4 256945.1 $208,166 Indirect and Fixed $244,675 $365,939 286951.5 334426.7 $326,078 Other -33.79 -$942 0 364.45 $4,070 Total $418,823 $554,309 $450,146 $591,736 $538,313 NOI $4,765 -$114,720 -$12,793 $40,973 $5,694 % Total Revenue 1% -26% -3% 6% 1% Source: Lyric Theater; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v4.xlsx]T-Historic Performance Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 8 14002 – Lyric Theater TIF Review Memo Figure 3 Stabilized Revenues and Expense in Year 6 Financing Table 5 presents the project financing for the Lyric. Debt provides the majority of the financing at 62 percent of the total project costs and approximately 70 percent of construction costs. Great Western Bank has already approved a construction loan and a permanent loan. The permanent loan has the following terms: • 20 year amortization with a 10 year balloon payment • Adjustable rate of 3.75 percent over the 5 year U.S. Treasuries, with a floor of 5 percent and adjusting every 5 years. Importantly, the Lyric pledged the TIF funds as collateral for the loan, and, as stated in its Application, the Lyric believes that, without the TIF allocation, it would have to renegotiate the loan or find additional sources of collateral – the results of which are far from certain. In its modeling scenarios, EPS assumes that the Lyric will received these same loan terms with or without the TIF, essentially assuming that the Lyric will be able to secure additional collateral. Again, this highlights the importance of the TIF funds for the viability of a project outside of the impact on project returns. Table 5 Lyric Theater Financing Sources -$300,000 -$200,000 -$100,000 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cash Flows Before Financing After Financing Source: Lyric Theather; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Description Amount % Total Debt $2,533,750 62% Equity $1,582,112 38% Total $4,115,862 100% Source: Lyric URA Executive Summary; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v6.xlsx]T-Sources Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 9 14002 – Lyric Theater TIF Review Memo EPS’s modeling of project financing estimates an equity contribution of approximately $500,000 more than the one represented in the Lyric’s Application. The difference results from using the more recent construction estimates provided by the Lyric and from including financing costs. EPS primarily mentions this as explanation for the discrepancy between this memorandum and the TIF Application. However, the size of this additional equity requirement may suggest that the Lyric is currently under-capitalized, which, in turn, may slow project or prevent initiation. Tempering this conclusion is the large amount of collateral that investors and benefactors have pledged to the project, which is more than sufficient to cover the $500,000. Table 6 summarizes the equity and collateral that investors and benefactors have pledged so far. Table 6 Lyric Theater Equity and Collateral Pledges TIF Revenues To understand the impact of the TIF allocation on the project, EPS estimated the TIF increments resulting from the construction of the Lyric. The TIF revenue results from an assumed market value of $285 per square feet, based on the unit cost of construction of the theater, an assessment rate of 29 percent, and a property tax rate of 90.634 mills. Currently, Fort Collins values the land at $285,000. This value provides the baseline assessment from which the increment is calculated. Table 7 presents the projected TIF revenue in Year 6, at stabilization. EPS estimates the increment to equal $70,417. Description Amount % Total Equity Investors $1,100,000 47% Subtotal $1,100,000 47% Collateral Private Investor $1,000,000 43% CHFA $250,000 11% Subtotal $1,250,000 53% Equity + Collateral $2,350,000 100% Source: Lyric Theater; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v4.xlsx]T-Equity and Collateral Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 10 14002 – Lyric Theater TIF Review Memo Table 7 Estimated TIF Revenue in Year 6 Figure 4 summarizes the total TIF revenues and the 50 percent commitment to the Lyric Theater in Year 1 to 10 of the project. The balloon payment on the loan for which the TIF allocation is collateral is due in Year 10. After Year 10, Fort Collins will presumably no longer allocate money to the Lyric. The Lyric plans to use this TIF allocation to help pay down the principal of its loan. More specifically, the Lyrics TIF Application states, “Instead of the TIF payments going to the 1209 N. College LLC, we would sign over the proceeds to the bank in order to pay down the principal of the loan.” Thus, in terms of project cash flows, the TIF allocation will reduce the balloon payment amount in Year 10. In its modeling, EPS assumes that there will be a two-year lag from project completion to when Fort Collins reassess the property. Such lags are typical in property tax reassessments, and represent a “business as usual” scenario for the TIF modeling. However, as a result, the project will not receive a TIF allocation until Year 3. Increases in TIF revenue result from an assumption that the market valuation will increase at 2 percent per year. Description Factor Year 6 Baseline Assessment (Land Value) Market Value $285,000 Assessed Value 29% $82,650 Lyric Theater Assessment Market Value $3,023,398 Assessed Value 29% $859,594 TIF Revenue Baseline Property Tax 9.06% $7,491 Lyric Theater Property Tax 9.06% $77,908 Increment $70,417 % TIF Commitment - 50% 50.00% $35,209 % TIF Commitment - 75% 75.00% $52,813 % TIF Commitment - 90% 90.00% $63,376 Source: Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v5.xlsx]Sheet7 Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 11 14002 – Lyric Theater TIF Review Memo Figure 4 TIF Revenues Year 1 to 10 Returns Table 8 summarizes three returns: the unlevered project internal rate of return (IRR) without taking into consideration project financing, the levered IRR without the TIF Funding, and the levered IRR with TIF funding. Using the cash flow assumptions provided by the Lyric, the project receives a 22.8 percent levered return without TIF funding and a 23.2 percent levered return with TIF funding. The relatively small impact of the TIF funding on IRR results from the Lyric using the funds to pay down the principal of the loan. Thus, the benefits of the TIF funding for the Lyric do not appear until Year 10 and are discounted. As due diligence, EPS also modeled the TIF funding as project cash flows, which the Lyric would directly receive the benefit of over time, rather than this benefit going to paying down the principal of the loan. EPS found that this increased project returns to 23.5 percent with TIF funding – thus only a marginal increase. Table 8 Project Returns with and without TIF Funding $0 $0 $34,445 $34,445 $35,209 $35,209 $35,988 $35,988 $36,782 $36,782 $0 $0 $34,445 $34,445 $35,209 $35,209 $35,988 $35,988 $36,782 $36,782 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 TIF Revenue Lyrice Commitment (50%) Remaining Increment Source: Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v6.xlsx]TIF Revenue Description Project (Unlevered) Without TIF Funding With TIF Funding Cash Flows Investment -$4,115,862 -$1,582,112 -$1,582,112 Total Cash Flows $11,593,596 $10,350,858 $10,699,056 PV of Cash Flows $2,546,919 $3,129,205 $3,263,451 Return Measures IRR 16.3% 22.8% 23.2% NPV (discount rate of 10%) $2,546,919 $3,129,205 $3,263,451 Source: Lyric Theater; Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v6.xlsx]T-Returns Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 12 14002 – Lyric Theater TIF Review Memo Even without the TIF funding, the project has an IRR of over 20 percent, a level that suggests that the Lyric project may be viable without the TIF funding. However, as mentioned previously, the cash flow projections provided by the Lyric are likely overly optimistic, which will lower returns on investment. Further, the TIF funding does more than just impact returns; it helps secure additional financing. To gain further perspective on the likelihood of the Lyric achieving projected returns, EPS completed a sensitivity analysis of the levered returns based on different stabilized occupancy and interest rate scenarios. Table 9 presents the results of this analysis without TIF funding, and Table 10 presents the returns with TIF funding. The analysis reveals that the project performance is highly sensitive to the stabilized occupancy rate. For example at an occupancy rate of 12.5 percent (the approximate average occupancy that EPS found in its previous movie theater market analysis) and an interest rate of 5.75 percent (the interest rate used in the calculations for Table 8), the levered IRR drops to 9.1 percent without TIF funding and 10 percent with TIF funding. Table 9 Sensitivity Analysis of Project Return without TIF Funding Table 10 Sensitivity Analysis of Project Return with TIF Funding Stabilized Occupancy IRR 10.0% 12.5% 15.0% 17.5% 20.0% 5.75% -2.6% 9.1% 15.2% 19.5% 22.8% 6.25% -3.4% 8.6% 14.9% 19.2% 22.5% 6.75% -4.2% 8.2% 14.5% 18.9% 22.2% 7.25% -5.1% 7.7% 14.1% 18.5% 21.9% 7.75% -5.9% 7.2% 13.7% 18.2% 21.6% Source: Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v6.xlsx]T-Sensitivity Interest Rate Stabilized Occupancy IRR 10.0% 12.5% 15.0% 17.5% 20.0% 5.75% -0.3% 10.0% 15.8% 19.9% 23.2% 6.25% -1.0% 9.6% 15.5% 19.6% 22.9% 6.75% -1.7% 9.2% 15.1% 19.3% 22.6% 7.25% -2.3% 8.7% 14.8% 19.0% 22.3% 7.75% -3.0% 8.3% 14.4% 18.7% 22.0% Source: Economic & Planning Systems H:\143002-Fort Collins On Call Financial Services\Models\[143002-Pro-Forma_Lyric Theater_v6.xlsx]T-Sensitivity Interest Rate Memorandum November 7, 2016 Lyric Theater TIF Application Review Page 13 14002 – Lyric Theater TIF Review Memo Conclusion In the analysis of the eligibility of the Lyric TIF Application, EPS concludes that the amount of TIF funding requested is within the eligible project costs. Moreover, the project itself seems to be exactly the kind of project that Fort Collins aimed to promote and incentivize in the North College URA. In addition to helping to further development through improvements to stormwater infrastructure, the project retains and expands a local business and creates an amenity that will both help create a sense of place in the area and generate revenue for the town. The “but-for” financial analysis of the project finds that, based on cash flow projections from the Lyric, the project achieves a 16 percent unlevered return and a 22.8 percent levered return without TIF funding. Such a result suggests that the TIF project should be able to attract private investment and proceed without any public financing. However, EPS believes the projected cash flows provided by the Lyric are overly optimistic based on the Lyric’s historic performance and a previous market analysis EPS completed for a movie theater project. In particular, EPS believes that the stabilized occupancy of 20 percent of seating capacity on an annual basis projected by the Lyric may be difficult to achieve. A sensitivity analysis found returns to be highly sensitive to occupancy, and that the likely returns to the project are closer to 9 percent without TIF funding and 10 percent with TIF funding, and therefore do not provide the project with an unreasonable return. Further, TIF funding not only impacts the viability of this project by increasing the return on equity, but it also helps to secure additional financing for the project and cover upfront costs. Lyric URA Application – URA Finance Committee Josh Birks and Patrick Rowe 11/21/16 Project Location 2 Project Location Lyric Cinema Café - 1209 N. College Ave. 3 Existing Conditions 4 Area: • Small lot sizes, irregularly configured • Inadequate access/circulation infrastructure for redevelopment • Stormwater challenges (compounded by small site size) Site Specific: • Low sitting site (in relation to adjacent grade) • Bounded by RR spur to north and west • Single shared access with site to south 5 Project Description Lyric Cinema Café – Expansion/Relocation • Three screen / 500 seat theater operation • Full restaurant • Bike-in outdoor venue Building Renderings (since modified) 6 7 Site Plan URA Request 8 Reimbursement of stormwater detention pond and improvements and landscaping costs up to an amount of $209,000 (paid over time as collected). Stormwater Improvements $149,603 Stormwater Contingency (10%) $14,960 Landscaping $44,437 TOTAL Reimbursement Cap $209,000 TIF Summary 9 Annual Property Tax Increment $38,981 Total Increment Generated (13 yrs) $506,755 Requested TIF $209,000 Requested TIF as Percentage of Estimated Generated TIF 41.24% Eligible Costs v. TIF Generation “But-For” 10 Annual Property Tax Increment $38,981 Total Increment $506,755 ROI without TIF assistance 9% ROI with TIF assistance 10% Third Party Financial Analysis Note: Third party reviewer relied on a lower occupancy rate than provided by applicant in materials. Lower rate was supported by a recent market study. Return was highly sensitive to occupancy rate. Project Benefits 11 Project Benefits • Unique and creative destination; • Expansion of local business; • Development of challenging site; • Improvements benefit other future developments; • City Plan Connections • EH 1.1 Supports job creation • EH 3.3 Support of local and creative • Policy CPR 2.2 Build Identity • North College Corridor Plan • LU 2.1 Complimentary Uses. Different attractions ‘across the river’. • FAD 2.1 Seek Leverage Opportunities. Set stage for additional development… Reimbursement Structure 12 • Reimbursement of up to $209,000 of eligible costs. • Applicant receives 65% of increment collection until reimbursement amount paid (9-years of estimated payments). Key Reimbursement Points 13 • Applicant must complete project and eligible improvements before receiving reimbursement payment. • URA may pre-pay the reimbursement at any time. • Reimbursement payments based on percentage of actual collections. 14 15