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Attachment 5.1 and 5.2 ECONOMIC FEASIBILITY STUDY ATTACHMENT 5.1 Public Improvements within the Revenue Allocation Area This Attachment includes a statement listing the kind, number, and proposed location of all proposed public works or improvements proposed to be installed within the Project Area, together with the estimated costs of such improvements pursuant to Idaho Code § 50-2905. This Attachment also sets forth a finding as to the economic feasibility of the proposed Project recognizing the specific assumptions used in the modeling, including a description of the methods of financing the estimated project costs, the timing of development and cash flow analysis. As more fully set forth in the Plan, the proposed Project to be funded by revenue allocation funds includes fully improved streets, utilities, and other public rights-of-way amenities, as well as park and open spaces, a community center and associated public parking facilities and/or structures. The Meridian Development Corporation (“MDC”) Public Improvement List set forth below identifies with specificity needed investments to support private investment in capital facilities. Capital facilities generally have long useful lives and significant costs. The overall Project and the infrastructure to support it are all consistent with the vision articulated in the City of Meridian Comprehensive Plan and as required in City development regulations. The cost estimates provided by architects and consulting engineers are based upon prices for similar construction in the broader area for 2020 and have not been adjusted for inflation. Estimated costs proposed to be incurred in implementing the Plan are as follows: Public Improvement List Proposed Public Infrastructure, Including Engineering, Design, Installation, Construction, and/or Reconstruction of: rd Improvements to 3 Street Improvements to Broadway Avenue Intersection Improvements and Rail Crossing Safety Enhancements Pedestrian Improvements Streetscape Improvements Sewer Infrastructure Improvements Water Infrastructure Improvements Electrical Distribution Improvements Right-of-Way Landscaping Improvements Utility Relocations Lateral Relocation and Improvements Attachment 5 - 1 Irrigation and Drainage Improvements Sub-total $1,215,000 Additional Public Parking Facilities and Open Space $1,510,000 Civic Block Improvements Civic Block Site Improvements $1,615,000 Structured Public Parking $4,250,000 Sub-Total $5,865,000 Community Center Construction $6,450,000 City of Meridian Community Center Contribution ($3,000,000) Net Project Area Cost Construction $3,450,000 1 Total Civic Block and Structure Parking Cost $12,315,000 Grand Total $12,040,000 It is understood the estimated costs detailed above will change over the life of the Plan due to inflation, further project refinement, timing and bidding. The cost estimates are a necessary assumption in determining economic feasibility and are estimates for the purpose of financial planning. Based on the assumptions made in the Study, the Project Area is estimated to generate $16,286,437 in tax increment/revenue allocation proceeds between 2020 and 2040. Initial urban renewal planning costs are estimated to be funded by a $75,000 interfund loan from MDC. Additionally, the Study assumes a $3,000,000 contribution from the City to support the construction of the proposed community center. The City's anticipated contribution is from Parks and Recreation impact fees that have been collected for a community center. At this time the City has not obligated any funds from impact fees or the general fund for the proposed community center. The estimated total resources for the Project are estimated to be $19,361,437. As identified above, there are presently $12,040,000 of estimated total Project Costs related to the Project after the City of Meridian’s contribution. The feasibility analysis assumes Projects will be implemented and advance-funded by property owners and/or 1 Includes City Community Center Contribution. Attachment 5 - 2 developers. For purposes of Idaho Code § 50-2905 and the Study, it is assumed that any owner or developer participant in the Project will be reimbursed with tax increment/revenue allocation proceeds through an owner participation agreement (OPA) negotiated by and between MDC and any owner and/or developer participant. Based on information from MDC staff, MDC currently administers OPAs in existing project areas utilizing 75% or 90% reimbursement to the owner or developer participant from tax increment/revenue allocation proceeds. In analyzing the economic feasibility of the proposed Project, an assumption of a 75/25 split is used recognizing the actual split will be subject to any negotiated OPA. For purposes of determining economic feasibility of the Project, administrative costs (District Operating Expenses) over the 20-year life of the Project Area are estimated to be $968,105 or approximately 6% of total estimated revenue. This amount was calculated using the assumption of 10% of annual tax increment/revenue allocation proceeds for administration of the Project Area or $50,000 per year. The actual amount of administrative costs will be set forth and determined in the MDC’s annual budget; however, for purposes of economic feasibility an estimate of costs is necessary. The initial interfund loan from MDC for preliminary Project Area costs is estimated in the Study to be repaid at 5% simple interest for a total obligation of $112,500. Considering the estimated revenue allocation proceeds over the life of the Project Area less the estimated Project costs, there is estimated to be a $100,000 positive balance of at the end of the 20-year term, rendering the Project economically feasible. Attachments 5.3 and 5.4 provide detailed information concerning revenue estimates and cash flow analysis. In analyzing the methods of financing, secure funding includes revenue allocation funds and is money the MDC is highly likely to receive should private development occur within the Project Area. The funds may not be in the MDC’s possession at the beginning of the Plan period, but it is virtually certain MDC will receive the funds should private development proceed as proposed. MDC may need to take specific actions to generate the funding, but those actions are within its powers. Despite the high probability of secure funding, no Project can proceed until a specific, enforceable funding plan is in place. Potential funding is money that might be received by the MDC over the life of the Project Area. It is funding the MDC is eligible for and exists under current law; however, each potential funding source requires one or more additional steps or decisions before the MDC can obtain the resources, and the ultimate decision is outside of the MDC’s independent control. The proposed City capital contribution to the community center and grant funds are examples of potential funding. Additionally, the issuance of bonds is not anticipated in this analysis. Potential funding is not assumed in determining economic feasibility. Attachment 5 - 3 Unfunded Projects, or portions of Projects are those lacking secure or potential funding. Unfunded Projects are not considered or assumed in determining economic feasibility. It is generally understood, the amount of tax increment/revenue allocation contributed to the Project will vary from the assumptions and estimates used in the economic feasibility study depending upon actual revenue and the actual cost of the Projects. Other sources of funding for Projects may include, but are not limited to:  Local Improvement Districts (LID)  Business Improvement Districts (BID)  Development Impact Fees  Franchise Fees  Grants from federal, state, local, regional agencies and/or private entities  Other bonds, notes and/or loans Summary of Estimated Cost of Operations and Improvements by Year Based on Assumptions (2020-2041) Year Secure Funding PotentiDistrict MDC Loan OPA Debt Total Project (TIF al Operating Debt Service Service (75%) Liabilities & FundinExpenses @ 2.65% MDC Loan) g 2020 $75,000 $0 $25,000 $0 $25,000 2021 $0 $0 $25,000 $0 $25,000 2022 $0 $0 $25,000 $0 $25,000 2023 $447,366 $0 $44,737 $40,000 $335,525 $420,261 2024 $456,578 $0 $48,368 $45,000 $342,434 $435,802 2025 $823,409, $0 $50,000 $27,500 $617,557 $695,057 2026 $840,141 $0 $50,000 $0 $630,106 $680,106 2027 $857,207 $0 $50,000 $0 $643,475 $693,475 2028 $874,615 $0 $50,000 $0 $824,615 $874,615 2029 $892,371 $0 $50,000 $0 $842,371 $892,371 2030 $910,482 $0 $50,000 $0 $860,482 $910,482 2031 $928,955 $0 $50,000 $0 $878,955 $928,955 2032 $947,797 $0 $50,000 $0 $897,797 $947,797 2033 $967,016 $0 $50,000 $0 $917,016 $967,016 2034 $986,619 $0 $50,000 $0 $936,619 $986,619 2035 $1,006,614 $0 $50,000 $0 $956,615 $1,006,615 2036 $1,027,008 $0 $50,000 $0 $977,008 $1,027,008 2037 $1,047,811 $0 $50,000 $0 $997,811 $1,047,811 2038 $1,069,029 $0 $50,000 $0 $1,019,029 $1,069,029 2039 $1,090,672 $0 $50,000 $0 $1,040,672 $1,090,672 2040 $1,112,747 $0 $50,000 $0 $1,462,746 $1,512,746 2041 $0 $0 0 $0 $0 Total $16,361,437 $0 $968,105 $112,500 $15,180,833 $16,261,437 Attachment 5 - 4 ATTACHMENT 5.2 Determination of Economic Feasibility Based on Assumptions Based upon reasonable assumptions and recognizing MDC’s ability to prioritize Projects in its budget and negotiate the terms of any owner participation agreement with an owner and/or developer, the Plan is deemed to be economically feasible as the estimated revenue in the Project Area exceeds the estimated Project costs. The economic feasibility of the Plan is based, in part, on the following factors:  The value of new taxable private development proposed in the Project Area  The timing of the proposed taxable development  The nature of the propose taxable development  The amount of tax increment/revenue allocation proceeds to be generated by proposed development  The estimated cost of public improvement projects in 2020 dollars  That the Projects are assumed to be advance funded by any owner or developer in the Project Area to be reimbursed with tax increment/revenue allocation proceeds over time pursuant to negotiated owner participation agreements.  If estimated revenue projections equal or exceed estimated project costs, the Plan is deemed to be economically feasible. The following is a summary of the analysis and estimates of the factors used to determine the economic feasibility of the MDC Union District Urban Renewal Plan. Attachments 5.3 and 5.4 provide a more detailed outlook on the revenues and expenses in determining economic feasibility. The following assumptions were used in Attachments 5.3 and 5.4 to support of finding the Project meets the requirements of economic feasibility: o Land Value Increases @ 1% / Yr. o Improvement Value Increases @ 2% / Yr. o Applicable Levy Rate is reduced from the 2019 certified applicable levy rates by an estimated 10% and held constant through the life of the Plan and Project Area. The Applicable Levy Rate does not include any exempted levies as identified in Idaho Code § 50-2908 o Total estimated Cost of Improvements over the life of the project: $12,040,000, after the City of Meridian’s contribution to the community center in the amount of $3,000,000 o Attachment 5.4 assumes 75% of the annual available tax increment/revenue allocation will be committed to reimburse an owner Attachment 5 - 5 or developer for advance-funded public improvements. It is understood and recognized the actual reimbursement percentage is a term to be negotiated under any OPA o Attachment 5.4 provides for “Additional Principal” payments to any owner or developer if sufficient funds are available and provided for in any OPA In summary, based on the assumptions as set forth in Attachments 5.1 and 5.2, and as supported by Attachments 5.3 and 5.4, it is evident the Project will generate adequate revenue within the Project Area to fund the necessary Projects rendering the Project economically feasible. 4852-5500-2807, v. 7 Attachment 5 - 6