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November 2013 EDC Supplemental Meeting Notes Page 2 C. Update on Alternative Financial Modeling As reported at the October EDC meeting, staff has been working with Ehlers and the Ryan/Colliers team on a alternative financial model for New Brighton Exchange. The goal of this exercise, is to create a dashboard analysis that shows the minimum level of development needed to support debt service payments (i.e. based on development in the ground and pending) and then what happens as different assumptions are adjusted on the east side. To the extent development density is higher or happens sooner, the City could possibly achieve a better return on its investment. In previous years, we have prepared a number of different scenarios that looked at the development potential of the site and associated resources (tax increment) that might be generated. As development has occurred, we have been better able to update the model and have greater confidence in the projections. For example, the west side will be fully developed, assuming the Pulte and APi projects move ahead as planned. On the east side of Old Highway 8, there are roughly 25 acres of net developable land to develop. Although we have identified five development blocks, the City and future developers do have some flexibility in how the sites layout. For example, Lots A and B could be combined (as well as D and E or E and F) for a larger project. Our marketing partners at Ryan Co. and Colliers have provided concept plans for how that might that be accomplished on some blocks. Over the years we have received some feedback that the models are too optimistic and perhaps are less helpful in answering in a key question: how much additional development is needed to make the project self-sufficient (i.e. adequate to pay NBE debt service)? In an effort to answer that question, we are taking a different approach in presenting the information. In lieu of multiple scenarios, we have prepared a one-page "dashboard" or snapshot that looks at the minimum amount of development needed to cover the NBE bonds. The revised financial model takes into consideration the following components: o The City needs to generate approximately$32M of total tax increment(life of district) to help support debt service. It is important to remember that for the next 11 years,NBE debt service is also being supported by pooled increment from other TIF districts. o To achieve $32M of total tax increment, the City needs develop roughly$109,900,000 of taxable market value upon full-build out. o To achieve $109,900,000 of taxable market value, the City will rely on the development already in place ($28M); the development planned for APi's expansion and Pulte Homes ($43M); and at least $38M of additional development on the east side. o Under a Minimum Development Scenario there are adequate resources to cover debt service and approximately$4.6M of cash remaining in Fund 460) at end of the project(2031-2032).