HomeMy WebLinkAboutItem II-ApplicationTax Incremental Financing Application
Morgan District Redevelopment
City of Oshkosh
Project Sponsor
The Morgan District, LLC
601 Oregon Street
Oshkosh, WI 54902
Submitted
December 2015
26
Tax Incremental Financing Application – Morgan District Redevelopment
Table of Contents
Application Information
Project/Property Summary
o Project/Property Summary
o Project Narrative
o Development Team Narrative
Project Budget/Financial Information
o Summary Sources and Uses
o Site 1
o Site 2
o Site 3
o Site 4
o Site 5
Certification/Agreement Page
Appendix
o City Summary Letter
o Detailed Project Narrative
o Site Map
o Project Renderings
o Appraisal
o Market Study
o Filing Fee
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Tax Incremental Financing Application – Morgan District Redevelopment
Application Information
Page from TIF Application
28
City
of
Oshkosh
Tax Incremental Financing
Policy and Application
Please complete and submit the following information to the City of Oshkosh for a more detailed review of
the feasibility of your request for Tax Incremental Financing (TIF) assistance. The application is comprised
of five parts:
1. Applicant Information
2. Project/Property Information
3. Project Narrative
4. Project Budget/Financial Information
5. Buyer Certification and Acknowledgement.
Where there is not enough space for your response or additional information is requested, please use an
attachment. Use attachments only when necessary and to provide clarifying or additional information.
The Department of Community Development (DCD) reviews all applications for TIF assistance. Failure to
provide all required information in a complete and accurate manner could delay processing of your
application and DCD reserves the right to reject or halt processing the application for incomplete submittals.
For further information please refer to the “City of Oshkosh Tax Incremental Financing Policy” document.
Legal Name: ________________________________________________________________________
Mailing Address: ____________________________________________________________________
Primary Contact #: _______________________________ Cell #: ___________________________
E-mail: _________________________________________ FAX #: ___________________________
Attorney:___________________________________________________________________________
Legal Entity: Individual(s)_____ Joint Tenants_____ Tenants in Common_____ Corporation_____
LLC_____ Partnership_____ Other_________________________________________
If not a Wisconsin corporation/partnership/LLC, state where organized: _________________________
Will a new entity be created for ownership? Yes____ No____
Principals of existing or proposed corporation/partnership/LLC and extent of ownership interest.
Name: Address: Title: Interest:
_________________ __________________________________ ______________ ___________
_________________ __________________________________ ______________ ___________
_________________ __________________________________ ______________ ___________
Is any owner, member, stockholder, partner, officer or director of any previously identified entities, or any
member of the immediate family of any such person, an employee of the City of Oshkosh? Yes___ No___
If yes, give the name and relationship of the employee:_________________________________________
Have any of the applicants (including the principals of the corporation/partnership/LLC) ever been
charged or convicted of a misdemeanor or felony? Yes_____ No_____
If yes, please furnish details:_____________________________________________________________
___________________________________________________________________________________
Applicant Information:
29
Tax Incremental Financing Application – Morgan District Redevelopment
Project/Property Summary
Pages from TIF Application
Project Narrative
Development Team Narrative
30
City
of
Oshkosh
Tax Incremental Financing
Policy and Application
Project/Property Summary:
Overall Project Summary and Objectives: ______________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
Current and Proposed Uses: _________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
Description of End Users: ___________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
Describe any zoning changes that will be needed:
____________________________________________
____________________________________________
____________________________________________
____________________________________________
____________________________________________
Property Summary:
Parcel/Land Area: ___________ SF
Building Area: ______________ SF
# of Dwelling Units: __________
# of Stories: _________________
# of Parking Spaces: __________
Identify any other approvals, permits or licenses (i.e. Liquor License, Health Department, etc):
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
Describe briefly what the project will do for the property and neighborhood:
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
_______________________________________________________________________________________
31
Final Plan/Specification Preparation: ____________________________________________________
Bidding and Contracting: _____________________________________________________________
Firm Financing Approval: ____________________________________________________________
Construction/Rehabilitation: __________________________________________________________
Landscaping/Site Work: ______________________________________________________________
Occupancy/Lease Up: ________________________________________________________________
City
of
Oshkosh
Tax Incremental Financing
Policy and Application
Project/Property Summary:
Project Timetable Date
Development Team
Developer: _________________________________________________________________________
Architect: __________________________________________________________________________
Surveyor: __________________________________________________________________________
Contractor: _________________________________________________________________________
Other Members: _____________________________________________________________________
Describe Team expertise and experience in developing similar projects:
___________________________________________________________________________________
___________________________________________________________________________________
Other current Team projects in development:
___________________________________________________________________________________
___________________________________________________________________________________
Financial ability of the applicant to complete the project:
___________________________________________________________________________________
___________________________________________________________________________________
Full and part-time jobs to be created by the proposed project including estimated salary:
___________________________________________________________________________________
___________________________________________________________________________________
Professional Studies
Market Studies: Applications for commercial and residential projects must include a comprehensive market
study. The market study must identify target markets, analysis of competition, demographics, market rents,
letters of intent/interest from prospective tenants, or for housing developments, sale prices or rental rates of
comparable properties.
Appraisal: All projects that involve the transfer of land must include a recent appraisal. Projects that include
land as a form of equity or collateral must also submit a recent appraisal. The appraisal must value the property
“as is”, and the impact on value must be considered for such items as demolition, environmental remediation,
relocation of utilities, lease buy-outs, and other work necessary to make the site developable. The property
must be valued assuming that the highest and best use is the proposed use.
32
Tax Incremental Financing Application – Morgan District Redevelopment
Project Narrative
Current Status
All structures and foundations have been removed from the site. Additional site work and planning
has continued in 2015 with anticipated groundbreaking for site 1 of the Project in fall 2016.
Proposed Development
The Project is anticipated to be completed in five or more phases over several years. Currently
there is a strong market demand for multifamily properties and commercial space. Taking that into
consideration, the initial phases are anticipated to contain residential development along with
commercial space to provide amenity access to the residential tenants and the community. The
Developer is working with a grocer to fill the majority of the commercial space for site 1. Depending
on the timeliness of the Project and the approval of the TIF, the market demand could change and
dictate the Developer to reevaluate future phases of the Project prior to commencement. It is the
Developer’s ultimate goal to have a successful long-term development that provides benefits to the
community, supports the City of Oshkosh’s development goals, and provides the required rate of
return to the Developer.
Timing and Sources Overview
The commencement of construction is currently anticipated to be:
Site 1: fall 2016
Site 2: fall 2017
Site 3: fall 2018
Site 4: fall 2018
Site 5: fall 2019
The current total development cost for all five phases of planned development is approximately
$68.6 million. Substantial costs are involved with the site and public/private infrastructure work
necessary for redevelopment of the riverfront property. The Project is estimated to leverage no
more than $40.4 million in private debt coupled with approximately $15.8 million of Developer
equity, deferred financing, or additional federal and state funding sources that can be raised for the
redevelopment leaving a $12.4 million development funding gap. The Developer is requesting a
Pay-As-You-Go TIF Note to support the redevelopment and make the Project feasible to develop.
Since the first TIF application was submitted to the City in September 2014, the federal New
Markets Tax Credit (“NMTC”) program and a grant from the State of Wisconsin have been identified
as potential sources for supporting the development of the grocery store and infrastructure needs
for site 1. The funding from these two sources, if any, have not been quantified or included in the
financial analysis because the programs require applications and approvals from various
agencies. However, the financial gap for site 1 is large enough that TIF assistance in addition to
support from other programs is required: Community Development Entities (“CDEs”), the
intermediaries that award NMTC allocations, and the State of Wisconsin will look favorably on the
33
Tax Incremental Financing Application – Morgan District Redevelopment
Project with the TIF commitment from the City. It will demonstrate a strong public-private
partnership. Baker Tilly Virchow Krause, LLP is assisting the Developer in the process of applying
to CDEs for a NMTC allocation. More information about these programs can be provided in the
future as the Project moves forward.
TIF Request
The Developer is requesting a Pay-As-You-Go TIF Note to support the Project. It is anticipated that
a new 27 year Tax Increment District (“TID”) will be created by the City and that the Developer will
receive 90% of the property tax increment generated from the Project for the remaining life of the
TID for each site. The Developer understands that this percentage of TIF assistance surpasses the
City’s guidelines for the typical development requesting TIF: The request is 18.08% of total Project
costs, falling below the TIF Cap of 25%. The detailed sources and uses, operating pro forma
assumptions, and reversion calculations are included in the appendix for each site that demonstrate
why the Developer’s request is necessary to make the Project financially feasible: The ‘Detailed
Project Narrative’ in the appendix also details the TIF funding criteria that the Project meets or
exceeds.
At this time the Developer is seeking a TIF Note from the City just for site 1, but the projected need
for TIF assistance for future sites is included in this application to support the City’s efforts to
create a new TID.
Lender Relationships
The Developer has very strong relationships with many lending institutions and could have
financing in place before the commencement of any Phase of the Project. The Developer is willing
to provide letters of financial reference from lending institutions upon request.
34
Tax Incremental Financing Application – Morgan District Redevelopment
Development Team Narrative
The Development Team at this point consists of the following.
Developer – The Morgan District, LLC
Contractor – Northcentral Construction Corporation
Surveyor, Engineer, and Environmental– The Sigma Group
Accounting Company and Market Analysis – Baker Tilly Virchow Krause, LLP
Legal Firm – Whyte Hirschboeck & Dudek S.C.
*Please note that this is a list of companies that the Developer has used this far and this list can
change based on the final scope of the Project.
1. Morgan District, LLC is comprised of Jeff Kowalik, Grant and Dennis Schwab, Nicholas and Peter
Lang.
• Jeff Kowalik has over 25 years in the commercial and multifamily construction field
and founded Northcentral Construction in 1990. Northcentral Construction Corporation
has extensive development experience that is detailed below. Jeff has also earned the
designation of Senior Certified Development Professional from ICSC for his work.
• Lang Development partners Peter and Nicholas Lang manage, own and have
developed a number of commercial, retail and multi-family properties through their family
of companies. They are a second generation company grounded in a strong Midwest work
ethic: The Lang’s also have a proven track record in the remediation, clean up and
redevelopment of Brownfield sites.
• Schwab Properties, LLC, which is operated by Dennis and Grant Schwab, was started
in 1967 by Dennis Schwab focused on the purchase and rehabilitation of multifamily
properties. Over the past 40 plus years Schwab Properties has grown into owning and
developing retail, multifamily, and commercial projects around the Fox Valley area and the
State of Wisconsin. Currently Schwab Properties owns and manages over 400 multifamily
units in the City of Oshkosh. The Schwab Group was integral in redevelopment of the
former foundry site.
35
Tax Incremental Financing Application – Morgan District Redevelopment
2. Northcentral Constuction Corporation (“NCC”)
• NCC was founded in 1990. The Company is built around the core vision of
understanding and exceeding client’s needs and deadlines: They are located in Fond du Lac,
WI and serve clients throughout the Midwest in a variety of sectors including: multifamily,
senior housing, tax credit, retail, commercial, hospitality, health care, and rehabilitation.
They have constructed in excess of 6,000 multifamily units, is a preferred contractor for
Walgreen’s, TJ Maxx, and JoAnn Fabrics in the Midwest, and has built for a vast array of
other retailers including. PetSmart, Staples, Roundy’s, Petco, and McDonald’s:
3. The Sigma Group (“Sigma”)
• Sigma focuses on creating functional, innovative solutions that optimize results.
They offer a diverse range of services, expertise and can-do attitude that enables their
clients to achieve a successful balance between today’s challenges and the long-term need
to preserve important resources.
4. Baker Tilly Virchow Krause, LLP (“BTVK”)
• BTVK is one of the top 15 accounting and advisory firms in the United States. They
offer innovative financial solutions and solid business strategies through diverse industry
and service specialization.
5. Whyte Hirschboeck & Dudek S.C. (“WHD”)
• WHD is a full-service law firm founded in 1943. Much has changed since then, but,
throughout, there remains a notable constant: WHD's commitment to the success of each
client. Just as experience is important in other types of business, legal experience is an
essential component in WHD’s ability to deliver effective and efficient services: With more
than 150 professionals, WHD offers clients the legal experience necessary to provide the
technical, yet practical, advice that every client deserves. Many of WHD’s attorneys have
gone beyond the study of law and have earned graduate degrees in a wide variety of fields
including engineering, medicine, business, technology, tax, political science and dispute
resolution.
36
Tax Incremental Financing Application – Morgan District Redevelopment
Project Budget/Financial Information
Summary Sources and Uses
Site 1
Site 2
Site 3
Site 4
Site 5
37
Morgan District Redevelopment
Summary of Sources and Uses
Timing Phase I: 2016 Phase II: 2017 Phase III: 2018 Phase IV: 2018 Phase V: 2019
Sources
Site I Site II Site III Site IV Site V Total
Private First Mortgage 12,700,000$ 5,500,000$ 11,100,000$ 3,500,000$ 7,600,000$ 40,400,000$
Equity 5,961,521$ 1,400,000$ 3,200,000$ 2,340,500$ 1,900,000$ 14,802,021$
Monetized TIF Note 4,037,000$ 1,615,000$ 3,018,000$ 2,179,000$ 1,595,000$ 12,444,000$
Deferred Developers Fee 297,979$ 146,500$ 220,000$ -$ 325,400$ 989,879$
22,996,500$ 8,661,500$ 17,538,000$ 8,019,500$ 11,420,400$ 68,635,900$
Uses
Land 175,000$ 225,000$ 245,000$ 200,000$ 80,000$ 925,000$
Site Work 4,400,000$ 782,000$ 1,960,000$ 280,000$ 1,960,000$ 9,382,000$
Hard Costs 16,800,000$ 6,240,000$ 12,900,000$ 6,487,000$ 7,400,000$ 49,827,000$
Soft Costs 387,500$ 225,000$ 790,500$ 795,000$ 637,500$ 2,835,500$
Financing Fees 562,500$ 375,000$ 787,500$ 187,500$ 587,500$ 2,500,000$
Professional Fees 34,500$ 34,500$ 85,000$ 70,000$ 105,400$ 329,400$
Developer Fee/Reserves 637,000$ 780,000$ 770,000$ -$ 650,000$ 2,837,000$
22,996,500$ 8,661,500$ 17,538,000$ 8,019,500$ 11,420,400$ 68,635,900$
NOTE: PHASE I ONLY: Since the first TIF application was submitted to the City in September 2014, the federal New Markets Tax Credit (“NMTC”) program and a
grant from the State of Wisconsin have been identified as potential sources for supporting the development of the grocery store and infrastructure needs for site 1.
The funding from these two sources, if any, have not been quantified or included in the financial analysis because the programs require applications and approvals
from various agencies. However, the financial gap for site 1 is large enough that TIF assistance in addition to support from other programs is required. Community
Development Entities (“CDEs”), the intermediaries that award NMTC allocations, and the State of Wisconsin will look favorably on the Project with the TIF
commitment from the City. It will demonstrate a strong public-private partnership. Baker Tilly Virchow Krause, LLP is assisting the Developer in the process of
applying to CDEs for a NMTC allocation. More information about these programs can be provided in the future as the Project moves forward.
38
DRAFT
TIF Application Update Supporting Model
Oregon & West 5th Avenue - Oshkosh, WI
Financial Model
12/8/2015
Morgan District Site I, LLC
NOTE: Since the first TIF application was submitted to the City in September 2014, the federal New Markets Tax Credit (“NMTC”) program and a grant from the State
of Wisconsin have been identified as potential sources for supporting the development of the grocery store and infrastructure needs for site 1. The funding from
these two sources, if any, have not been quantified or included in the financial analysis because the programs require applications and approvals from various
agencies. However, the financial gap for site 1 is large enough that TIF assistance in addition to support from other programs is required. Community Development
Entities (“CDEs”), the intermediaries that award NMTC allocations, and the State of Wisconsin will look favorably on the Project with the TIF commitment from the
City. It will demonstrate a strong public-private partnership. Baker Tilly Virchow Krause, LLP is assisting the Developer in the process of applying to CDEs for a
NMTC allocation. More information about these programs can be provided in the future as the Project moves forward.
12/8/2015
39
Morgan District Site I, LLC PROJECT ASSUMPTIONS 1.25
PROJECT INFORMATION FINANCING ASSUMPTIONS Equity Information
Owner:Morgan District Site I, LLC Construction Loan A 12,997,979$ General Partner's Capital Contribution Percent of Ownership
Interest rate 4.50%Entry Date:Year 2016 General Partner 0.01%
County Winnebago Term (months)24 Month 1 Investor 99.99%
MFI 69,500$ Day 1 Total 100.00%
First Mortgage 12,700,000$
Number of Units 121 Interest Rate 4.50%Equity $5,961,521 Cash Flow Distribution
Amortization 20 General Partner 0.01%
LP Formation 2009 Term 15 Investor 99.99%
Year 2016 Lender Required DCR 1.25 Total 100.00%
Month 1 Start Year 2016
Start Month 1 Income, Loss & Credits
Construction Start General Partner 0.01%
Year 2016 Monetized TIF Note 4,037,000$ Investor 99.99%
Month 1 Interest Rate 0.00% Total 100.00%
Amortization 0
Construction Period 12 Term 0 Sale Proceeds Distribution
Start Year 2015 General Partner 0.01%
Operations Start Month 4 Investor 99.99%Year 2017 Total 100.00%
Month 1 New Markets Tax Credits/State Grant -$
Interest Rate 0.00%
Placed in Service Date Amortization Cash Flow
Year 2017 Term 0
Month 1 Start Year 0
Day 1 Start Month 0
Deferred Developer Fee 297,979$
Interest Rate 0.00%
5,961,521
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/8/2015
40
Morgan District Site I, LLCPROJECT ASSUMPTIONS
OPERATING EXPENSES Residential Per Unit Commercial
Professional Fees 200,000 1,653 12,000Maintenance & Repairs 100,000 826 12,000
Operating Expenses 100,000 826 6,000
Insurance 100,000 826 6,000
Real Estate Taxes - - Based on RE Tax calc
500,000 4,132 36,000 Total Recoverable Expenses (Commercial Only)
Replacement Reserve - - 16,920
Property Management Fee - - 28,200
Total 500,000 4,132 81,120 Total Annual Expense
Annual Operating Exp. Increase 3.00%
Annual Real Estate Tax Increase 3.00%
Annual Management Fee Increase 3.00%
Annual Reserve Increase 3.00%
Interest rate on reserves 0.15%
Annual Commercial Exp. Increase 2.00%
RENTAL INCOME
Number of SF per Rent Monthly Monthly Monthly Annual Annual
Bedrooms Units Baths Unit*PSF/month Net Rent Utility/CAM Gross Rent Net Rent Gross Rent
Commercial Space 1 NA 35,000 14.00$ $40,833 490,000 0
Apartment Building 120 NA 900 925.00$ 925.00$ 1,332,000 0
Total 121 143,000 1,822,000 0
COMMERCIAL INCOMEINCOMEBase Gross Commercial Income 1,822,000$
Base Gross Rent 1,822,000$ Commercial Expense Recovery 100%
Rent Increases 2.00%Commercial Expense Reimbursement -$
Income Increases 2.00%Commercial Income Increase 2.0%
Vacancy Loss 5.00%Commercial Vacancy 5.0%
Other Income (PUPM)-$ Other Income PSF -$
Other Income (annually)-$ Other Income (annually)-$
Stabilized NOI 1,189,480
Cap Rate 8.50%
Fair market Value (Income Approach)13,993,882 appraisal
Cap Rate 9.00%
Fair market Value (Income Approach)13,216,444 assessed value
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/8/2015
41
Morgan District Site I, LLC
SOURCES AND USES
SOURCES OF FUNDS Construction
Post
Construction Permanent
First Mortgage -$ 12,700,000$ 12,700,000$
Equity 5,961,521 - 5,961,521
Monetized TIF Note 4,037,000 - 4,037,000
New Markets Tax Credits/State Grant - - -
Deferred Developers Fee - 297,979 297,979
Construction Loan 12,997,979 (12,997,979) -
Total Sources Of Funds 22,996,500$ -$ 22,996,500$
$0 $0 $0
Post Total
USES OF FUNDS Construction Construction Permanent
Land Acquisition 175,000 - 175,000
Site Work
Excavation/ Erosion Control 187,500 - 187,500
Environmental/ Disposal 137,500 - 137,500
Site Utilities 618,500 - 618,500
Site Concrete 157,500 - 157,500
Asphalt Paving 380,000 - 380,000
Landscaping 125,000 - 125,000
Utility Allowance 200,000 - 200,000
Site Lighting 75,000 - 75,000
Signage 75,000 - 75,000
Rammed Agg. Piers 500,000 - 500,000
Construction Contingency 190,400 - 190,400
Hard Costs
Apartment/Commercial Building 18,363,200 - 18,363,200
Soft Costs
Architecture 187,500 - 187,500
Engineering 315,400 - 315,400
Title 20,000 - 20,000
Building Permit 10,000 - 10,000
Real Estate Taxes 5,000 - 5,000
Marketing 15,000 - 15,000
Insurance 25,000 - 25,000
Financing Fees
Financing Fees 62,500 - 62,500
Construction Loan Interest 500,000 - 500,000
Professional Fees
Appraisal 5,000 - 5,000
Market Study 4,500 - 4,500
Legal/Accounting 25,000 - 25,000
Developer Fees / Reserves
Developer Fee 637,000 - 637,000
Total Uses Of Funds 22,996,500$ -$ 22,996,500$
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/8/2015
42
Morgan District Site I, LLC
FORECAST OF NET CASH FLOW FROM OPERATIONS
1 2 3 4 5 6 7 8 9 10
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
INCOME
Residential:
Rental Income 721,503 1,332,000 1,358,640 1,385,813 1,413,529 1,441,800 1,470,636 1,500,048 1,530,049 1,560,650
Vacancy -5.00%- (66,600) (67,932) (69,291) (70,676) (72,090) (73,532) (75,002) (76,502) (78,033) EGI Residential 721,503 1,265,400 1,290,708 1,316,522 1,342,853 1,369,710 1,397,104 1,425,046 1,453,547 1,482,617
Commercial:
Base Gross Commercial Income 408,333 490,000 499,800 509,796 519,992 530,392 541,000 551,820 562,856 574,113
Commercial Expense Reimbursement 10,658 219,854 409,944 421,875 434,157 446,800 459,814 473,211 487,003 501,199
Commercial Vacancy (20,417) (24,500) (24,990) (25,490) (26,000) (26,520) (27,050) (27,591) (28,143) (28,706)
EGI Commercial 398,574 685,354 884,754 906,182 928,150 950,672 973,764 997,439 1,021,716 1,046,606
Total Effective Gross Income 1,120,078 1,950,754 2,175,462 2,222,703 2,271,003 2,320,381 2,370,867 2,422,486 2,475,263 2,529,223
EXPENSES
Residential
Professional Fees 108,820 200,000 206,000 212,180 218,545 225,101 231,854 238,810 245,974 253,353
Maintenance & Repairs 54,410 100,000 103,000 106,090 109,273 112,551 115,928 119,406 122,988 126,678
Operating Expenses 54,410 100,000 103,000 106,090 109,273 112,551 115,928 119,406 122,988 126,678
Insurance 54,410 100,000 103,000 106,090 109,273 112,551 115,928 119,406 122,988 126,678
Residential Operating Expenses 272,050 500,000 515,000 530,450 546,364 562,754 579,638 597,028 614,938 633,387
Commercial
Professional Fees 6,529 12,000 12,240 12,485 12,734 12,989 13,249 13,514 13,784 14,060
Maintenance & Repairs 6,529 12,000 12,240 12,485 12,734 12,989 13,249 13,514 13,784 14,060
Operating Expenses 3,265 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030
Insurance 3,265 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030
Real Estate Taxes - 183,854 373,224 384,421 395,954 407,832 420,067 432,669 445,650 459,019
Management Fee 20,417 24,500 24,990 25,490 26,000 26,520 27,050 27,591 28,143 28,706
Reserve for Replacement 3.00%- 16,920 17,428 17,950 18,489 19,044 19,615 20,203 20,809 21,434
Commercial Operating Expenses 40,004 261,274 452,362 465,316 478,646 492,363 506,479 521,005 535,955 551,338
Total Operating Expenses 312,054 761,274 967,362 995,766 1,025,010 1,055,117 1,086,117 1,118,033 1,150,893 1,184,725
Net Operating Income 808,023 1,189,480 1,208,100 1,226,938 1,245,993 1,265,265 1,284,750 1,304,453 1,324,370 1,344,498
Debt Service
Debt Service - 1st mortgage - 964,158 964,158 964,158 964,158 964,158 964,158 964,158 964,158 964,158
DSCR- 1st - 1.23 1.25 1.27 1.29 1.31 1.33 1.35 1.37 1.39
Cash Flow 808,023 225,322 243,943 262,780 281,835 301,107 320,593 340,295 360,213 380,341
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/8/2015
43
Morgan District Site I, LLC
Before Tax Cash Flow Equity Analysis
With TIF Note Without TIF Note
IRR -3.62%-10.31%
Period Year
Projected Cash
Flows Projected Cash Flows
0 2016 (5,961,521)$ (9,998,521)$ Equity Required
1 2017 808,023$ 808,023$
2 2018 225,322$ 225,322$
3 2019 243,943$ 243,943$
4 2020 262,780$ 262,780$
5 2021 281,835$ 281,835$
6 2022 301,107$ 301,107$
7 2023 320,593$ 320,593$
8 2024 340,295$ 340,295$
9 2025 360,213$ 360,213$
10 2026 1,532,768$ 1,532,768$ Cash Flow Year 10 + Proceeds from Reversion
Proceeds from Reversion Analysis
Year 10 NOI 1,344,498$ Per Cash Flow Tab
Cap Rate @ Sell 7.0%
Sales Price 19,207,119$ NOI/Cap Rate
Selling Expenses 1,152,427$ 6%
Net Sales Price 18,054,692$ SP - SE
Gain/Proceeds from Reversion 1,152,427$
NOTE: Project not financially
feasible but for other sources
discussed in the application
narrative (not detailed here)
and the monetized TIF note to
reduce equity required for
development
44
DRAFT
TIF Application Update Supporting Model
Oregon & West 5th Avenue - Oshkosh, WI
Financial Model
12/3/2015
Morgan District Site II, LLC
12/3/2015
45
Morgan District Site II, LLC PROJECT ASSUMPTIONS
PROJECT INFORMATION FINANCING ASSUMPTIONS Equity Information
Owner:Morgan District Site II, LLC Construction Loan A 5,646,500$ General Partner's Capital Contribution Percent of Ownership
Interest rate 4.50%Entry Date:Year 2015 General Partner 0.01%
County Winnebago Term (months)24 Month 1 Investor 99.99%
MFI 69,500$ Day 1 Total 100.00%
First Mortgage 5,500,000$
Number of Units 2 Interest Rate 4.50%Equity $1,400,000 Cash Flow Distribution
Amortization 20 General Partner 0.01%
LP Formation 2009 Term 15 Investor 99.99%
Year 2017 Lender Required DCR 1.25 Total 100.00%
Month 1 Start Year 2016
Start Month 1 Income, Loss & Credits
Construction Start General Partner 0.01%
Year 2017 Monetized TIF Note 1,615,000$ Investor 99.99%
Month 1 Interest Rate 0.00% Total 100.00%
Amortization 0
Construction Period 12 Term 0 Sale Proceeds Distribution
Start Year 2015 General Partner 0.01%
Operations Start Month 4 Investor 99.99%Year 2018 Total 100.00%
Month 1 State Funds -$
Interest Rate 0.00%
Placed in Service Date Amortization Cash Flow
Year 2018 Term 0
Month 1 Start Year 0
Day 1 Start Month 0
Deferred Developer Fee 146,500$
Interest Rate 0.00%
1,400,000
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/3/2015
46
Morgan District Site II, LLCPROJECT ASSUMPTIONS
OPERATING EXPENSES Residential Per Unit Commercial
Professional Fees - - 12,000Maintenance & Repairs - - 12,000
Operating Expenses - - 6,000
Insurance - - 6,000
Real Estate Taxes - - Based on RE tax Calc
- - 36,000 Total Recoverable Expenses (Commercial Only)
Replacement Reserve - - 20,160
Property Management Fee - - 36,600
Total - - 92,760 Total Annual Expense
Annual Operating Exp. Increase 3.00%
Annual Real Estate Tax Increase 3.00%
Annual Management Fee Increase 3.00%
Annual Reserve Increase 3.00%
Interest rate on reserves 0.15%
Annual Commercial Exp. Increase 2.00%
RENTAL INCOME
Number of SF per Rent Monthly Monthly Monthly Annual Annual
Bedrooms Units Baths Unit*PSF Net Rent Utility/CAM Gross Rent Net Rent Gross Rent
Building 1 1 NA 24,000 14.00$ $28,000 336,000 0
Building 2 1 NA 24,000 14.00$ $28,000 336,000 0
Total 2 48,000 672,000 0
COMMERCIAL INCOME
RESIDENTIAL INCOME Base Gross Commercial Income 672,000$
Base Gross Residential Rent -$ Commercial Expense Recovery 100%
Rent Increases 2.00%Commercial Expense Reimbursement -$
Residential Income Increases 2.00%Commercial Income Increase 2.0%
Residential Vacancy Loss 5.00%Commercial Vacancy 5.0%
Other Income (PUPM)-$ Other Income PSF -$
Other Income (annually)-$ Other Income (annually)-$
Stabilized NOI:584,640
Cap Rate 8.50%
Fair Market Value (Income Approach)6,878,118 appraisalCap rate 9.00%
Fair Market Value (Income Approach)6,496,000 Assessed Value
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/3/2015
47
Morgan District Site II, LLC
SOURCES AND USES
SOURCES OF FUNDS Construction
Post
Construction Permanent
First Mortgage -$ 5,500,000$ 5,500,000$
Equity 1,400,000 - 1,400,000
Monetized TIF Note 1,615,000 - 1,615,000
Deferred Developers Fee - 146,500 146,500
Construction Loan 5,646,500 (5,646,500) -
Total Sources Of Funds 8,661,500$ -$ 8,661,500$
$0 $0 $0
Post Total
USES OF FUNDS Construction Construction Permanent
Land Acquisition 225,000 - 225,000
Site Work
Excavation/ Erosion Control 125,000 - 125,000
Environmental/ Disposal 70,000 - 70,000
Site Utilities 60,000 - 60,000
Site Concrete 72,000 - 72,000
Asphalt Paving 105,000 - 105,000
Landscaping 50,000 - 50,000
Utility Allowance 30,000 - 30,000
Site Lighting 30,000 - 30,000
Signage 35,000 - 35,000
Rammed Agg. Piers 205,000 - 205,000
Hard Costs
Office Building #1 2,400,000 - 2,400,000
Office Building # 2 2,400,000 - 2,400,000
Office Interior Finish 1,440,000 - 1,440,000
Soft Costs
Architecture 100,000 - 100,000
Engineering 50,000 - 50,000
Title 20,000 - 20,000
Building Permit 10,000 - 10,000
Real Estate Taxes 5,000 - 5,000
Marketing 15,000 - 15,000
Insurance 25,000 - 25,000
Financing Fees
Financing Fees 50,000 - 50,000
Construction Loan Interest 325,000 - 325,000
Professional Fees
Appraisal 5,000 - 5,000
Market Study 4,500 - 4,500
Legal/Accounting 25,000 - 25,000
Developer Fees / Reserves
Developer Fee 780,000 - 780,000
Total Uses Of Funds 8,661,500$ -$ 8,661,500$
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/3/2015
48
Morgan District Site II, LLC
FORECAST OF NET CASH FLOW FROM OPERATIONS
1 2 3 4 5 6 7 8 9 10
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
INCOME
Commercial:
Base Gross Commercial Income 532,000 672,000 685,440 699,149 713,132 727,394 741,942 756,781 771,917 787,355
Commercial Expense Reimbursement 45,563 116,677 200,494 206,141 211,951 217,928 224,076 230,401 236,907 243,601
Commercial Vacancy (26,600) (33,600) (34,272) (34,957) (35,657) (36,370) (37,097) (37,839) (38,596) (39,368)
EGI Commercial 550,963 755,077 851,662 870,333 889,427 908,952 928,921 949,343 970,228 991,588
Total Effective Gross Income 550,963 755,077 851,662 870,333 889,427 908,952 928,921 949,343 970,228 991,588
EXPENSES
Commercial
Professional Fees 13,500 12,000 12,240 12,485 12,734 12,989 13,249 13,514 13,784 14,060
Maintenance & Repairs 13,500 12,000 12,240 12,485 12,734 12,989 13,249 13,514 13,784 14,060
Operating Expenses 6,750 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030
Insurance 6,750 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030
Real Estate Taxes - 80,677 163,774 168,687 173,748 178,960 184,329 189,859 195,554 201,421
Management Fee 26,600 33,600 34,272 34,957 35,657 36,370 37,097 37,839 38,596 39,368
Reserve for Replacement 3.00%- 20,160 20,765 21,388 22,029 22,690 23,371 24,072 24,794 25,538
Commercial Operating Expenses 67,100 170,437 255,531 262,487 269,637 276,988 284,544 292,312 300,297 308,507
Total Operating Expenses 67,100 170,437 255,531 262,487 269,637 276,988 284,544 292,312 300,297 308,507
Net Operating Income 483,863 584,640 596,131 607,846 619,789 631,965 644,377 657,031 669,931 683,082
Debt Service
Debt Service - 1st mortgage - 417,549 417,549 417,549 417,549 417,549 417,549 417,549 417,549 417,549
DSCR- 1st - 1.40 1.43 1.46 1.48 1.51 1.54 1.57 1.60 1.64
Cash Flow 483,863 167,091 178,583 190,298 202,241 214,416 226,829 239,482 252,382 265,533
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/3/2015
49
Morgan District Site II, LLC
Before Tax Cash Flow Equity Analysis
With TIF Note Without TIF Note
IRR 14.63%-0.77%
Period Year
Projected Cash
Flows
Projected Cash
Flows
0 2016 (1,400,000)$ (3,015,000)$ Equity Required
1 2017 483,863$ 483,863$
2 2018 167,091$ 167,091$
3 2019 178,583$ 178,583$
4 2020 190,298$ 190,298$
5 2021 202,241$ 202,241$
6 2022 214,416$ 214,416$
7 2023 226,829$ 226,829$
8 2024 239,482$ 239,482$
9 2025 252,382$ 252,382$
10 2026 720,921$ 720,921$ Cash Flow Year 10 + Proceeds from Reversion
Proceeds from Reversion Analysis
Year 10 NOI 683,082$ Per Cash Flow Tab
Cap Rate @ Sell 9.0%
Sales Price 7,589,795$ NOI/Cap Rate
Selling Expenses 455,388$ 6%
Net Sales Price 7,134,407$ SP - SE
Gain/Proceeds from Reversion 455,388$
NOTE: Project not financially
feasible but for the monetized
TIF note to reduce equity
required for development
50
DRAFT
TIF Application Supporting Model
Oregon & West 5th Avenue - Oshkosh, WI
Financial Model
12/9/2015
Morgan District Site III, LLC
Multi Family Units
12/9/2015
51
Morgan District Site III, LLC PROJECT ASSUMPTIONS 1.25
PROJECT INFORMATION FINANCING ASSUMPTIONS Equity Information
Owner:Morgan District Site III, LLC Construction Loan A 11,320,000$ General Partner's Capital Contribution Percent of Ownership
Interest rate 4.50%Entry Date:Year 2015 General Partner 0.01%
County Winnebago Term (months)24 Month 1 Investor 99.99%
MFI 69,500$ Day 1 Total 100.00%
First Mortgage 11,100,000$
Number of Units 156 Interest Rate 4.50%Equity $3,200,000 Cash Flow Distribution
Amortization 20 General Partner 0.01%
LP Formation 2009 Term 15 Investor 99.99%
Year 2015 Lender Required DCR 1.25 Total 100.00%
Month 1 Start Year 2016
Start Month 1 Income, Loss & Credits
Construction Start General Partner 0.01%
Year 2015 Monetized TIF Note 3,018,000$ Investor 99.99%
Month 1 Interest Rate 0.00% Total 100.00%
Amortization 0
Construction Period 12 Term 0 Sale Proceeds Distribution
Start Year 2015 General Partner 0.01%
Operations Start Month 4 Investor 99.99%Year 2018 Total 100.00%
Month 1 State Funds -$
Interest Rate 0.00%
Placed in Service Date Amortization Cash Flow
Year 2018 Term 0
Month 1 Start Year 0
Day 1 Start Month 0
Deferred Developer Fee 220,000$
Interest Rate 0.00%
3,200,000
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
52
Morgan District Site III, LLCPROJECT ASSUMPTIONS
OPERATING EXPENSES Residential Per Unit Commercial
Professional Fees 25,000 160 0Maintenance & Repairs 41,000 263 0
Operating Expenses 70,000 449 0
Insurance 50,000 321 0
Real Estate Taxes - - 0 Based on RE Tax Calc
186,000 1,192 - Total Recoverable Expenses (Commercial Only)
Replacement Reserve - - -
Property Management Fee 81,713 524 0
Total 267,713 1,716 0 Total Annual Expense
Annual Operating Exp. Increase 3.00%
Annual Real Estate Tax Increase 3.00%
Annual Management Fee Increase 3.00%
Annual Reserve Increase 3.00%
Interest rate on reserves 0.15%
Annual Commercial Exp. Increase 2.00%
765,000
RENTAL INCOME
Number of SF per Rent Monthly Monthly Monthly Annual Annual
Bedrooms Units Baths Unit*PSF Net Rent Utility/CAM Gross Rent Net Rent Gross Rent
TBD 156 0 850 900.00$ $140,400 $0 140,400 1,684,800 0
Total 156 132,600 1,684,800 0
COMMERCIAL INCOMERESIDENTIAL INCOME Base Gross Commercial Income -$
Base Gross Residential Rent 1,684,800$ Commercial Expense Recovery 100%
Rent Increases 2.00%Commercial Expense Reimbursement -$
Residential Income Increases 2.00%Commercial Income Increase 2.0%
Residential Vacancy Loss 3.00%Commercial Vacancy 5.0%
Other Income (PUPM)-$ Other Income PSF -$
Other Income (annually)-$ Other Income (annually)-$
Stabilized NOI 1,201,633
Cap Rate 7.750%
Fair Market Value (Income Approach)15,504,945 appraisal
Cap Rate 8.250%
Fair Market Value (Income Approach)14,565,251
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
53
Morgan District Site III, LLC
SOURCES AND USES
SOURCES OF FUNDS Construction
Post
Construction Permanent
First Mortgage -$ 11,100,000$ 11,100,000$
Equity 3,200,000 - 3,200,000
Monetized TIF Note 3,018,000 - 3,018,000
Deferred Developers Fee - 220,000 220,000
Construction Loan 11,320,000 (11,320,000) -
Total Sources Of Funds 17,538,000$ -$ 17,538,000$
$0 $0 $0
Post Total
USES OF FUNDS Construction Construction Permanent
Land Acquisition 245,000 - 245,000
Site Work
Excavation/ Erosion Control 350,000 - 350,000
Environmental/ Disposal 175,000 - 175,000
Site Utilities 140,000 - 140,000
Site Concrete 105,000 - 105,000
Asphalt Paving 245,000 - 245,000
Landscaping 105,000 - 105,000
Utility Allowance 52,500 - 52,500
Site Lighting 52,500 - 52,500
Signage 35,000 - 35,000
Rammed Agg. Piers 700,000 - 700,000
Hard Costs
2 large MF Buildings 12,900,000 - 12,900,000
Soft Costs
Architecture 262,500 - 262,500
Engineering 175,000 - 175,000
Title 100,000 - 100,000
Building Permit 75,000 - 75,000
Real Estate Taxes 25,000 - 25,000
Marketing 78,000 - 78,000
Insurance 75,000 - 75,000
Soft Cost Contingency - - -
Financing Fees
Financing Fees 87,500 - 87,500
Construction Loan Interest 700,000 - 700,000
Professional Fees
Appraisal 10,000 - 10,000
Soil Testing 15,000 - 15,000
Market Study 10,000 - 10,000
Legal/Accounting 50,000 - 50,000
Developer Fees / Reserves
Developer Fee 770,000 - 770,000
Reserves and Escrows - - -
Total Uses Of Funds 17,538,000$ -$ 17,538,000$
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
54
Morgan District Site III, LLC
FORECAST OF NET CASH FLOW FROM OPERATIONS
1 2 3 4 5 6 7 8 9 10
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
INCOME
Residential:
Rental Income 1,238,400 1,684,800 1,718,496 1,752,866 1,787,923 1,823,682 1,860,155 1,897,358 1,935,306 1,974,012
Other Income - - - - - - - - - -
Vacancy -3.00%- (50,544) (51,555) (52,586) (53,638) (54,710) (55,805) (56,921) (58,059) (59,220)
EGI Residential 1,238,400 1,634,256 1,666,941 1,700,280 1,734,285 1,768,972 1,804,350 1,840,437 1,877,247 1,914,792
Total Effective Gross Income 1,238,400 1,634,256 1,666,941 1,700,280 1,734,285 1,768,972 1,804,350 1,840,437 1,877,247 1,914,792
EXPENSES
Residential
Professional Fees 18,110 25,000 25,750 26,523 27,319 28,139 28,983 29,852 30,748 31,670
Maintenance & Repairs 29,700 41,000 42,230 43,497 44,802 46,146 47,530 48,956 50,425 51,938
Operating Expenses 50,708 70,000 72,100 74,263 76,491 78,786 81,150 83,585 86,093 88,676
Insurance 36,220 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339
Real Estate Taxes - 164,910 334,766 344,809 355,154 365,808 376,783 388,086 399,729 411,720
Management Fee 61,920 81,713 83,347 85,014 86,714 88,449 90,218 92,022 93,862 95,740
Reserve for Replacement 3.00%- - - - - - - - - -
Residential Operating Expenses 196,658 432,623 609,693 627,151 645,117 663,603 682,627 702,203 722,351 743,082
Total Operating Expenses 196,658 432,623 609,693 627,151 645,117 663,603 682,627 702,203 722,351 743,082
Net Operating Income 1,041,742 1,201,633 1,057,248 1,073,129 1,089,169 1,105,369 1,121,723 1,138,234 1,154,896 1,171,710
Debt Service
Debt Service - 1st mortgage - 842,689 842,689 842,689 842,689 842,689 842,689 842,689 842,689 842,689
DSCR- 1st - 1.43 1.25 1.27 1.29 1.31 1.33 1.35 1.37 1.39
Cash Flow 1,041,742 358,944 214,559 230,440 246,480 262,680 279,034 295,545 312,207 329,021
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
55
Morgan District Site III, LLC
Before Tax Cash Flow Equity Analysis
With TIF Note Without TIF Note
IRR 6.88%-4.88%
Period Year
Projected Cash
Flows
Projected Cash
Flows
0 2016 (3,200,000)$ (6,218,000)$ Equity Required
1 2017 1,041,742$ 1,041,742$
2 2018 358,944$ 358,944$
3 2019 214,559$ 214,559$
4 2020 230,440$ 230,440$
5 2021 246,480$ 246,480$
6 2022 262,680$ 262,680$
7 2023 279,034$ 279,034$
8 2024 295,545$ 295,545$
9 2025 312,207$ 312,207$
10 2026 1,333,343$ 1,333,343$ Cash Flow Year 10 + Proceeds from Reversion
Proceeds from Reversion Analysis
Year 10 NOI 1,171,710$ Per Cash Flow Tab
Cap Rate @ Sell 7.0%
Sales Price 16,738,709$ NOI/Cap Rate
Selling Expenses 1,004,323$ 6%
Net Sales Price 15,734,387$ SP - SE
Gain/Proceeds from Reversion 1,004,323$
NOTE: Project not financially
feasible but for the monetized
TIF note to reduce equity
required for development
56
Morgan District Redevelopment
Site IV
For Sale Waterfront Condos
Total Units 24 24
Sources Per Unit Per Unit
Equity 2,340,500 97,521 4,519,500 188,313
Debt 3,500,000 145,833 3,500,000 145,833
TIF 2,179,000 90,792 0 0
Total Sources 8,019,500$ 334,146$ 8,019,500$ 334,146$
Uses
Land Acquisition 200,000 8,333 200,000 8,333
Site Work 280,000 11,667 280,000 11,667
Hard Costs 6,487,000 270,292 6,487,000 270,292
Soft Costs 795,000 33,125 795,000 33,125
Financing Fees 187,500 7,813 187,500 7,813
Professional Fees 70,000 2,917 70,000 2,917
Developer Fee/Reserves 0 0 0 0
Total Uses 8,019,500$ 334,146$ 8,019,500$ 334,146$
Sales Price (Avg Per Unit)375,000$ 375,000$
Gross Profit 9,000,000$ 9,000,000$
SE @ 7% of GP 630,000$ 26,250 630,000$ 26,250
Net Profit 350,500$ 14,604 350,500$ 14,604
Return on Equity (before tax)15.0%7.8%
With TIF Note Without TIF Note
57
DRAFT
TIF Application Update Supporting Model
Oregon & West 5th Avenue - Oshkosh, WI
Financial Model
12/9/2015
Morgan District Site V, LLC
9 Townhouse Buildings - 108 Units
12/9/2015
58
Morgan District Site V, LLC PROJECT ASSUMPTIONS
PROJECT INFORMATION FINANCING ASSUMPTIONS Equity Information
Owner:Morgan District Site V, LLC Construction Loan A 7,925,400$ General Partner's Capital Contribution Percent of Ownership
Interest rate 4.50%Entry Date:Year 2019 General Partner 0.01%
County Winnebago Term (months)24 Month 1 Investor 99.99%
MFI 69,500$ Day 1 Total 100.00%
First Mortgage 7,600,000$
Number of Units 108 Interest Rate 4.50%Equity $1,900,000 Cash Flow Distribution
Amortization 20 General Partner 0.01%
LP Formation 2009 Term 15 Investor 99.99%
Year 2019 Lender Required DCR 1.2 Total 100.00%
Month 1 Start Year 2016
Start Month 1 Income, Loss & Credits
Construction Start General Partner 0.01%
Year 2019 Monetized TIF Note 1,595,000$ Investor 99.99%
Month 1 Interest Rate 0.00% Total 100.00%
Amortization 0
Construction Period 12 Term 0 Sale Proceeds Distribution
Start Year 2015 General Partner 0.01%
Operations Start Month 4 Investor 99.99%Year 2020 Total 100.00%
Month 1 State Funds -$
Interest Rate 0.00%
Placed in Service Date Amortization Cash Flow
Year 2020 Term 0
Month 1 Start Year 0
Day 1 Start Month 0
Deferred Developer Fee 325,400$
Interest Rate 0.00%
1,900,000
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
59
Morgan District Site V, LLCPROJECT ASSUMPTIONS
OPERATING EXPENSES Residential Per Unit Commercial
Professional Fees 25,000 231 0Maintenance & Repairs 50,000 463 0
Operating Expenses 25,000 231 0
Insurance 40,000 370 0
Real Estate Taxes - - 0 Based on RE Tax Calc
140,000 1,296 - Total Recoverable Expenses (Commercial Only)
Replacement Reserve - - -
Property Management Fee 56,570 524 0
Total 196,570 1,820 0 Total Annual Expense
Annual Operating Exp. Increase 3.00%
Annual Real Estate Tax Increase 3.00%
Annual Management Fee Increase 3.00%
Annual Reserve Increase 3.00%
Interest rate on reserves 0.15%
Annual Commercial Exp. Increase 2.00%
RENTAL INCOME
Number of SF per Rent Monthly Monthly Monthly Annual Annual
Bedrooms Units Baths Unit*PSF Net Rent Utility/CAM Gross Rent Net Rent Gross Rent
TBD 108 TBD 900 1.11$ $97,200 $0 97,200 1,166,400 0
Total 108 97,200 1,166,400 0
COMMERCIAL INCOMERESIDENTIAL INCOME Base Gross Commercial Income -$
Base Gross Residential Rent 1,166,400$ Commercial Expense Recovery 100%
Rent Increases 2.00%Commercial Expense Reimbursement -$
Residential Income Increases 2.00%Commercial Income Increase 2.0%
Residential Vacancy Loss 3.00%Commercial Vacancy 5.0%
Other Income (PUPM)15.00$ Other Income PSF -$
Other Income (annually)19,440$ Other Income (annually)-$
Stabilized NOI 820,670
Cap Rate 8.00%
Fair market Value (Income Approach)10,258,370 Appraisal
Cap Rate 8.25%
Fair market Value (Income Approach)9,947,510 Assessed Value
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
60
Morgan District Site V, LLC
SOURCES AND USES
SOURCES OF FUNDS Construction
Post
Construction Permanent
First Mortgage -$ 7,600,000$ 7,600,000$
Equity 1,900,000 - 1,900,000
Monetized TIF Note 1,595,000 - 1,595,000
Deferred Developers Fee - 325,400 325,400
Construction Loan 7,925,400 (7,925,400) -
Total Sources Of Funds 11,420,400$ -$ 11,420,400$
$0 $0 $0
Post Total
USES OF FUNDS Construction Construction Permanent
Land Acquisition 80,000 - 80,000
Site Work
Excavation/ Erosion Control 350,000 - 350,000
Environmental/ Disposal 175,000 - 175,000
Site Utilities 140,000 - 140,000
Site Concrete 105,000 - 105,000
Asphalt Paving 245,000 - 245,000
Landscaping 105,000 - 105,000
Utility Allowance 52,500 - 52,500
Site Lighting 52,500 - 52,500
Signage 35,000 - 35,000
Rammed Agg. Piers 700,000 - 700,000
Hard Costs
9 - Townhouse Buildings 7,400,000 - 7,400,000
Soft Costs
Architecture 262,500 - 262,500
Engineering 175,000 - 175,000
Title 40,000 - 40,000
Building Permit 20,000 - 20,000
Real Estate Taxes 15,000 - 15,000
Marketing 75,000 - 75,000
Insurance 50,000 - 50,000
Financing Fees
Financing Fees 87,500 - 87,500
Construction Loan Interest 500,000 - 500,000
Professional Fees
Appraisal 10,000 - 10,000
Soil Testing 15,000 - 15,000
Market Study 8,000 - 8,000
Legal/Accounting 40,000 - 40,000
Commissions 32,400 - 32,400
Developer Fees / Reserves
Developer Fee 650,000 - 650,000
Total Uses Of Funds 11,420,400$ -$ 11,420,400$
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
61
Morgan District Site V, LLC
FORECAST OF NET CASH FLOW FROM OPERATIONS
1 2 3 4 5 6 7 8 9 10
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
INCOME
Residential:
Rental Income 637,200 1,166,400 1,189,728 1,213,523 1,237,793 1,262,549 1,287,800 1,313,556 1,339,827 1,366,624
Vacancy -3.00%- (34,992) (35,692) (36,406) (37,134) (37,876) (38,634) (39,407) (40,195) (40,999)
EGI Residential 637,200 1,131,408 1,154,036 1,177,117 1,200,659 1,224,673 1,249,166 1,274,149 1,299,632 1,325,625
Total Effective Gross Income 637,200 1,131,408 1,154,036 1,177,117 1,200,659 1,224,673 1,249,166 1,274,149 1,299,632 1,325,625
EXPENSES
Residential
Professional Fees 13,503 25,000 25,750 26,523 27,319 28,139 28,983 29,852 30,748 31,670
Maintenance & Repairs 27,005 50,000 51,500 53,045 54,636 56,275 57,963 59,702 61,493 63,338
Operating Expenses 13,503 25,000 25,750 26,523 27,319 28,139 28,983 29,852 30,748 31,670
Insurance 21,604 40,000 41,200 42,436 43,709 45,020 46,371 47,762 49,195 50,671
Real Estate Taxes - 114,168 231,761 238,714 245,876 253,252 260,849 268,675 276,735 285,037
Management Fee 31,860 56,570 57,702 58,856 60,033 61,234 62,458 63,707 64,982 66,281
Reserve for Replacement 3.00%- - - - - - - - - -
Residential Operating Expenses 107,474 310,738 433,663 446,097 458,892 472,059 485,607 499,551 513,901 528,667
Total Operating Expenses 107,474 310,738 433,663 446,097 458,892 472,059 485,607 499,551 513,901 528,667
Net Operating Income 529,726 820,670 720,373 731,020 741,767 752,614 763,559 774,598 785,731 796,957
Debt Service
Debt Service - 1st mortgage - 576,976 576,976 576,976 576,976 576,976 576,976 576,976 576,976 576,976
DSCR- 1st - 1.42 1.25 1.27 1.29 1.30 1.32 1.34 1.36 1.38
Cash Flow 529,726 243,693 143,397 154,044 164,791 175,638 186,582 197,622 208,755 219,981
PRELIMINARY DRAFT- FOR DISCUSSION PURPOSES ONLY 12/9/2015
62
Morgan District Site V, LLC
Before Tax Cash Flow Equity Analysis
With TIF Note Without TIF Note
IRR 7.86%-2.89%
Period Year
Projected Cash
Flows
Projected Cash
Flows
0 2016 (1,900,000)$ (3,495,000)$ Equity Required
1 2017 529,726$ 529,726$
2 2018 243,693$ 243,693$
3 2019 143,397$ 143,397$
4 2020 154,044$ 154,044$
5 2021 164,791$ 164,791$
6 2022 175,638$ 175,638$
7 2023 186,582$ 186,582$
8 2024 197,622$ 197,622$
9 2025 208,755$ 208,755$
10 2026 903,088$ 903,088$ Cash Flow Year 10 + Proceeds from Reversion
Proceeds from Reversion Analysis
Year 10 NOI 796,957$ Per Cash Flow Tab
Cap Rate @ Sell 7.0%
Sales Price 11,385,107$ NOI/Cap Rate
Selling Expenses 683,106$ 6%
Net Sales Price 10,702,000$ SP - SE
Gain/Proceeds from Reversion 683,106$
NOTE: Project not
financially feasible but for
the monetized TIF note to
reduce equity required for
development
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Tax Incremental Financing Application – Morgan District Redevelopment
Certification/Agreement
Certification per TIF Application
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Tax Incremental Financing Application Morgan District Redevelopment December 2015
Agreement (per page 17 of TIF Application)
I, by signing this application, agree to the following: 1. I have read and will abide by all the requirements of the City for Tax Incremental Financing. 2. The information submitted is correct. 3. I agree to pay all costs involved in the legal and fiscal review of this project. These costs may include, but not be limited to, bond counsel, outside legal assistance, and outside financial assistance, and all costs involved in the issuance of the bonds or loans to finance the project. 4. I understand that the City reserves the right to deny final approval, regardless of preliminary approval or the degree of construction completed before application for final approval. 5. The undersigned authorizes the City of Oshkosh to check credit references and verify financial and other information. 6. The undersigned also agrees to provide any additional information as may be requested by the City after filing of this application. Applicant Name: Morgan District, LLC ___________________________________________________ Grant Schwab Date: December 2015
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Tax Incremental Financing Application – Morgan District Redevelopment
Appendix
City Summary Letter
Detailed Project Narrative
Site Map
Project Renderings
Appraisal
Market Study
Filing Fee
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The Morgan District, LLC
601 Oregon Street
Oshkosh, WI
Mark Rohloff
City Manager
City of Oshkosh
215 Church Avenue
Oshkosh, WI 54903-1130
RE: Morgan District Redevelopment
City Summary Letter
Dear Mark,
The Morgan District, LLC is pleased to submit a Tax Increment Financing (“TIF”) Policy Application
to the City of Oshkosh for our proposed redevelopment of 27 acres of land located along the Fox
River. We seek to transform the property into a vibrant new mixed-use community connecting the
redevelopment with downtown, the riverfront and creating a place to work, shop, and play along
prime riverfront property.
The Morgan District Redevelopment Project is comprised of approximately 23.5 acres west of
Oregon Street and 3.5 acres of land east of Oregon Street (the “Project”). The Project is proposed to
consist of a mix of multifamily housing, light commercial and retail uses, and a combination of
middle to high end condominiums. End users of the property will include individuals and families
living on the site, community members frequenting and working at the commercial and retail uses,
and business owners renting space from the Developer.
The Developer and Owner, The Morgan District, LLC; is currently renting the property to Oshkosh
Corporation, formerly Oshkosh Truck. Oshkosh Corporation is using the site for vehicle parking as
they design and build specialty trucks and truck bodies. All structures and foundations have been
removed from the site. Additional site work and planning has continued since the first application
to the City in September 2014. Groundbreaking for the first phase of the Project in anticipated to be
late fall 2016. The Project is anticipated to be completed in five or more phases.
The Project meets the criteria and threshold required for TIF funding. The Project represents a
redevelopment of underutilized land which will provide many benefits to the City and the
properties surrounding area and is not financially feasible but for TIF funding. The Project will
aid/provide the following benefits:
1. Attracting businesses to the community to improve the economic base.
2. Meeting recommendations outlined in the City’s strategic planning documents by
supporting development along the Fox River and downtown.
3. Involving retail development.
4. Contributing to public infrastructure.
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5. Creating new employment in the area with the creation of retail and office spaces and from
the management and maintenance of the residential units.
6. Enhancing the streetscape and pedestrian experience by providing land for the City River
walk, improving underutilized land providing a more appealing view for all existing and
new neighbors.
7. Providing direct benefit to the distressed area through the elimination of blight and
abatement of the environmentally contaminated land and structures that were on the site.
8. Including quality design and overall aesthetic for final plans including a comprehensive
redevelopment approach taking into account modern design, universal design, integrated
site planning with sustainable design of buildings and landscaping demanded by the people
and businesses that the City of Oshkosh wishes to attract and retain.
The current total development cost for all five phases of planned development is approximately
$68.6 million. Substantial costs are involved with the site and public/private infrastructure work
necessary for redevelopment of the riverfront property. The Project is estimated to leverage no
more than $40.4 million in private debt coupled with approximately $15.8 million of Developer
equity, deferred financing, or additional federal and state funding sources that can be raised for the
redevelopment leaving a $12.4 million development funding gap. The Developer is requesting a
Pay-As-You-Go TIF Note along with the creation of a new 27 year Tax Increment District to support
the redevelopment and make the Project feasible to develop.
Included with this application package are initial projections of development sources and uses,
operating pro forma assumptions, and reversion calculations for review. The Developer has very
strong relationships with many lending institutions and will have financing in place before the
commencement of any phase of the Project. The Developer is willing to provide letters of financial
reference from lending institutions upon request.
It is the Developer’s ultimate goal to have a successful long-term development that provides
benefits to the community, supports the City of Oshkosh’s development goals, and provides the
required rate of return to the Developer. The Project will bring construction jobs to the community
for several years to come as the Project is completed in phases. The commercial development will
create permanent part- and full-time jobs. Once development plans have been finalized the
economic impact of the Project can be provided to the City if requested.
Thank you for reviewing our application for Tax Increment Financing for the Morgan District
Redevelopment project. We look forward to future discussions and working with you and others to
see this worthy Project move forward. Please do not hesitate to reach out to me if you have any
other questions.
Sincerely,
Grant Schwab
Representative of Morgan District, LLC
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Tax Incremental Financing Application – Morgan District Redevelopment
Detailed Project Narrative
The Morgan District Redevelopment Project is comprised of approximately 23.5 acres west of
Oregon Street and 3:5 acres of land east of Oregon Street (the “Project”): The Project is proposed to
consist of a mix of multifamily housing, light commercial and retail uses, and a combination of
middle to high end condominiums. End users of the property will include individuals and families
living on the site, community members frequenting and working at the commercial and retail uses,
and business owners renting space from the Developer.
Current Use
The Developer and Owner, The Morgan District, LLC; is currently renting the property to Oshkosh
Corporation, formerly Oshkosh Truck. Oshkosh Corporation is using the site for vehicle parking as
they design and build specialty trucks and truck bodies.
Project Overview and Timing
All structures and foundations have been removed from the site. Additional site work and planning
has continued since the first application to the City in September 2014. Groundbreaking for site 1
of the Project in anticipated to be late fall 2016. The Project is anticipated to be completed in five or
more phases.
Site 1: fall 2016
New construction of 120 rentable multifamily residential units and 35,000 square feet of rentable
commercial development along the west side of Oregon Street with on grade parking.
Site 2: fall 2017
New construction of 48,000 square feet of rentable commercial development along the east side of
Oregon Street with on grade parking.
Site 3: fall 2018
New construction of 156 “eUrban” residential rental units within three large elevator buildings with
a diverse mix of units and bedroom sizes to match market demand.
Site 4: fall 2018
New construction of 24 waterfront condos for sale to the public.
Site 5: fall 2019
New construction of nine “Big House” multifamily rental buildings with 12 units per building for a
total of 108 rental residential units with a diverse mix of units and bedroom sizes to match market
demand.
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Tax Incremental Financing Application – Morgan District Redevelopment
Meets TIF Policy Requirements
The Project meets the criteria and threshold required for TIF funding. The Project represents a
redevelopment of underutilized land which will provide many benefits to the City and the
properties surrounding area and is not financially feasible but for TIF funds. The Project will
aid/provide the following benefits:
1. Attracting businesses to the community to improve the economic base.
2. Meeting recommendations outlined in the City’s strategic planning documents by
supporting development along the Fox River and downtown.
3. Involving retail development.
4. Contributing to public infrastructure.
5. Creating new employment in the area with the creation of retail and office spaces and from
the management and maintenance of the residential units.
6. Enhancing the streetscape and pedestrian experience by providing land for the City River
walk, improving underutilized land providing a more appealing view for all existing and
new neighbors.
7. Providing direct benefit to the distressed area through the elimination of blight and
abatement of the environmentally contaminated land and structures that were on the site.
8. Including quality design and overall aesthetic for final plans including a comprehensive
redevelopment approach taking into account modern design, universal design, integrated
site planning with sustainable design of buildings and landscaping demanded by the people
and businesses that the City of Oshkosh wishes to attract and retain.
Financing Overview
Since the first TIF application was submitted to the City in September 2014, the federal New
Markets Tax Credit (“NMTC”) program and a grant from the State of Wisconsin have been identified
as potential sources for supporting the development of the grocery store and infrastructure needs
for site 1. The funding from these two sources, if any, have not been quantified or included in the
financial analysis because the programs require applications and approvals from various
agencies. However, the financial gap for site 1 is large enough that TIF assistance in addition to
support from other programs is required: Community Development Entities (“CDEs”), the
intermediaries that award NMTC allocations, and the State of Wisconsin will look favorably on the
Project with the TIF commitment from the City. It will demonstrate a strong public-private
partnership. Baker Tilly Virchow Krause, LLP is assisting the Developer in the process of applying
to CDEs for a NMTC allocation. More information about these programs can be provided in the
future as the Project moves forward.
The current total development cost for all five phases of planned development is approximately
$68.6 million. Substantial costs are involved with the site and public/private infrastructure work
necessary for redevelopment of the riverfront property. The Project is estimated to leverage no
more than $40.4 million in private debt coupled with approximately $15.8 million of Developer
equity, deferred financing, or additional federal and state funding sources that can be raised for the
redevelopment leaving a $12.4 million development funding gap. The Developer is requesting a
Pay-As-You-Go TIF Note to support the redevelopment and make the Project feasible to develop.
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Tax Incremental Financing Application – Morgan District Redevelopment
The Developer is requesting a Pay-As-You-Go TIF Note to support the Project. It is anticipated that
a new 27 year Tax Increment District (“TID”) will be created by the City and that the Developer will
receive 90% of the property tax increment generated from the Project for the remaining life of the
TID for each site. The Developer understands that this percentage of TIF assistance surpasses the
City’s guidelines for the typical development requesting TIF: The request is 18:08% of total Project
costs, falling below the TIF Cap of 25%. The detailed sources and uses, operating pro forma
assumptions, and reversion calculations are included in the appendix for each site that demonstrate
why the Developer’s request is necessary to make the Project financially feasible: The ‘Detailed
Project Narrative’ in the appendix also details the TIF funding criteria that the Project meets or
exceeds.
At this time the Developer is seeking a TIF Note from the City just for site 1, but the projected need
for TIF assistance for future sites is included in this application to support the City’s efforts to
create a new TID.
The Developer has very strong relationships with many lending institutions and will have financing
in place before the commencement of any phase of the Project. The Developer is willing to provide
letters of financial reference from lending institutions upon request.
Below is a summary table of sources and uses for all five sites. Detailed sources and uses, operating
pro forma assumptions, and reversion calculations are included in the appendix for each site.
Please note as discussed above, site 1 is pursuing other federal and state funding resources.
It is the Developer’s ultimate goal to have a successful long-term development that provides
benefits to the community, supports the City of Oshkosh’s development goals, and provides the
required rate of return to the Developer. The Project will bring construction jobs to the community
for several years to come as the Project is completed in phases. The commercial development will
create permanent part- and full-time jobs. Once development plans have been finalized the
economic impact of the Project can be provided to the City if requested.
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Tax Incremental Financing Application – Morgan District Redevelopment
Site Map
The following site plan is for all five development sites contemplated within the Morgan
District Redevelopment plans. New buildings, jobs, and infrastructure are to be created on
both sides of Oregon Street. The building plans and layout are conceptual to provide an
overview of use, density and site design.
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Tax Incremental Financing Application - Morgan District Redevelopment
Location Map
74
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Tax Incremental Financing Application – Morgan District Redevelopment
Project Renderings
Building and site renderings can be provided for all sites in the future upon request and as
needed for development approval and financing. Right now a rendering for site 1 is
included.
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Tax Incremental Financing Application – Morgan District Redevelopment
Appraisal
Third party reporting including the appraisal will be furnished upon request and as needed
for development approval and financing.
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Tax Incremental Financing Application – Morgan District Redevelopment
Market Study
Third party reporting including the market study will be furnished upon request and as
needed for development approval and financing.
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Tax Incremental Financing Application – Morgan District Redevelopment
Filing Fee
The Developer has donated a significant amount of linear feet of river walk land to the City
of Oshkosh to allow the City to develop the river walk. The Developer is in the process of
negotiating to donate more land to the City for even further continuation of the river walk.
The Developer is requesting that the City take this in consideration since they have not
submitted the filing fee with this application.
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