Laserfiche WebLink
III. COST OF THE AGREEMENT TO THE AGENCY <br />This section presents the total potential cost of the Agreement to the Agency, as well as the "net cost" of the <br />project after consideration of the project revenues. The net cost can be either an actual cost, when <br />expenditures exceed receipts, or a net gain, when revenues created by implementation of the Agreement <br />exceed expenditures. <br />A. Estimated Cost to the Agency <br />The costs to the Agency resulting from this transaction relate to funding the $1 million acquisition cost. The <br />Agency will acquire the site using Section 108 Loan proceeds. Under the term of the loan agreement, the $ 1 <br />million loan will be repaid with 3 interest only payments of approximately $53,600 and 17 equal amortization <br />installments of approximately $91,100. Debt service costs over the 20-year period will total $1,709,500. The <br />net present value of the debt service payments assuming a 7% discount rate is approximately $866,700. <br />B. Revenues to the Agency <br />Under the terms of the DDA, the Developer will provide a $10,000 option payment and purchase the site <br />from the Agency for $1 million with a promissory note. The note will carry a simple interest rate of 3% <br />and a 55 year term.. Payments shall be deferred for the 55-year term and forgiven at the end of the 55 year <br />term provided that the project remains in compliance with the terms of the DDA. Agency revenues are <br />anticipated to total $10,000. <br />Given the tax exempt status of the Developer and the consideration that 100% of the units will be deed <br />restricted to very low income households, the Project is expected to be exempt from property taxes. <br />Therefore, the Project is not expected to generate any property tax increment to the Agency. <br />C. Net Cost to the Agency <br />The net cost to the Agency resulting from this transaction is the difference between the Agency's debt <br />service-costs on the Section 1081and acquisition loan and Developer payments to the Agency to purchase <br />the site. As shown below, it is estimated that the net cost to the Agency is $1,699,500 in nominal dollars <br />and $856,700 in net present value terms, assuming a 7% discount rate. <br />Nominal Dollars <br />Agency Costs <br />Agency Revenues <br />Net Agency Cost <br />$1,709,500 <br />$10,000 <br />$1,699,500 <br />Net Present Value <br />$866,700 <br />_ _ $10,000 <br />$856,700 <br />001-001.doc Keyser Marston Associates, Inc. <br />19096.023 Page 6 <br />