HomeMy Public PortalAbout2013-10-18c-JeffersonCityButForReport-COVERMEMO
MEMORANDUM
TO: Drew Hilpert, Interim City Administrator
FROM: Tom Kaleko, Senior Vice President
Tom Denaway, Analyst
DATE: December 30, 2013
SUBJECT: Impact of Revised Project Budget on But-For Determination Report
The project budget and reimbursable project costs in the Capital Mall TIF plan have been revised from the original
version of the plan on which the But-For Determination report was based. The Developer revised the project budget
by reducing the total overall project costs from $36,883,975 to $35,883,975 due to the elimination of the $1,000,000
financing cost line-item previously included. The Developer had previously requested reimbursement of the financing
cost line-item of $300,000 from TIF and $300,000 from CID. As a result of the revised budget, we have been asked
to provide comment on the potential impact the revision may have on the findings of the original But-For report.
The modified budget lowered the total project cost by $1,000,000. The Developer modified the private cost, and the
reimbursable amounts, in a manner that removed $1,000,000 in total costs while still maintaining the same ratio of
cost sharing between public and private categories. While the revised project budget is $1,000,000 lower, the
Developer is still responsible for funding 57.40% of the project cost, with the remaining 42.6% funded by TIF and
CID. This sharing ratio is approximately the same as the original TIF plan budget.
Impact on But-For Determination
The methodology for determining the potential for the project to proceed without assistance is based on evaluating
the rate at which project assumptions would have to change in order for the project to reach feasibility. In the “Return
Analysis” section of the original report we indicated the project would need to realize a 26% reduction in project cost
for the project to be feasible without assistance. The modified project budget does represent a reduction in project
costs of approximately 2.7%; an amount significantly below the rate of change necessary for the project to be
feasible without assistance. Therefore it is our conclusion that the modified project budget does not impact our
finding that the project would not proceed but-for the requested assistance.
Impact on Rate of Return with Assistance
One of the calculations illustrated in the But-For report is the potential return realized by the Developer with the
requested assistance. The potential impact of the modified budget on the rate of return with-assistance should be
negligible, as the Developer has maintained the original ratio of public to private funding. Therefore all parties have
benefited equally from the reduced project costs, and the internal rate of return with assistance should be largely
unchanged from the original calculation.
Springsted Incorporated
9229 Ward Parkway, Suite 104
Kansas City, MO 64114-3311
Tel: 816-333-7200
Fax: 816-333-6899
Email: advisors@springsted.com
www.springsted.com
Jefferson City, Missouri
December 30, 2013
Page 2
Impact of Change in PILOT Calculation
The Developer updated their projected TIF revenues to account for revised base value amounts. This change
resulted in a slightly higher PILOT revenue stream than previously calculated. However, because the requested
reimbursement amount had already been determined, the Developer will not be receiving any increased TIF revenue
as a result of this change. The Developer may potentially be repaid their reimbursable amount at a slightly faster
pace than previously expected, which would positively impact the development’s return with assistance though we
feel it is likely to be a negligible benefit. Additionally, because the but-for determination is based on the feasibility of
the development without assistance, the revised base value does not impact the but-for determination.