Project Financing

• The current tax value of the property is $1.85 million. After completion of the project, the tax value of the land is expected to exceed $38 million representing an increase in tax value of over 2000%.
• Because of the added costs of demolition and site preparation, some public assistance is necessary. To meet these added costs, the City has created an Incentive District to utilize Tax Increment Financing. The use of an Incentive District eliminates any need for a slum and blight designation.
• After the construction and sale of the new homes, the live work (loft) units, and the leasing of commercial space, the new owners will pay real estate taxes. A portion of these real estate taxes will be used to pay $4 Million in proceeds generated by a single 20-year G.O. Bond Issue.
• The Bond Issuance is approximately 10% of the projected market value of the project once completed. (See graph.)
• Project only needs to achieve 65% ($25.5 Million) of Developer's projected value to cover annual debt service and other obligations.
• The money generated from this bond issuance can only be used for public improvements including the costs of land acquisition, demolition, environmental clean-up, sidewalks, curbing, utilities, streetscape, public/pedestrian plazas.
• The City proposes a modest tax abatement (100% on all new taxes for the first two years, and for the remaining three a 50% abatement on new taxes) to buyers to establish the market and encourage quick sales, which in turn ensures sufficient TIF revenue to cover debt service.

Revenues Generated

• The Rockport Square Project will increase the tax base and the total tax revenues generated from the project site to both the City and the Lakewood Public Schools.
• Schools will continue to receive the same revenues annually from year one.
• The project will generate an estimated $1.4 million in income and payroll taxes over a 20-year period, averaging approximately $77,000 annually, from construction workers, retail employees and new residents.
  The project site currently generates just over $60,000 annually in real property taxes to all entities (schools, city, county and library). After repaying the bonds, the project site will generate over an estimated $1 million in additional real property taxes.

Other Project Notes

• Developer agrees to cover annual principal and interest payments until the tax abatements expire and/or revenues received from the new taxes cover this cost.
• Forest City provides Completion Guarantee to ensure that project gets built as required by the Development Agreement.
• Developer will obtain a Letter of Credit if the project is delayed to cover any shortfalls of funds if the revenues of the new taxes are not sufficient to cover annual principal and interest payments.
• Inter-Creditor Agreement is required which ensures that the City has the right to step in and work with the private financing institution to find another developer in case of default.
• Developer is required to follow a project construction completion schedule to ensure timely completion of the development and to ensure timely receipt of TIF revenues.

For more information, visit www.rockportsquare.com.