You are the economic development director for the city of Newstown. You are approached by a developer who is proposing to redevelop a blighted and abandoned city block of your downtown. The city block needs to be purchased and cleared of the remaining buildings on the site. The redevelopment proposal is a $25 million mix-use redevelopment project, with retail and office uses on the first floor and two floors of apartment units above. The developer has a commitment from a technology firm that it will move its headquarters and its 50 employees to the new building. Half of the building's proposed 50 apartment units will be for low and moderate income families. The developer commits to hiring contractors paying prevailing wages. Your job, as the city's economic development director, is to help the developer understand how the project could be financed using the city's financial incentives available.

Items to note: Newstown is an entitlement city, receiving over $7m in CDBG funds annually. Based on previous commitments, the City can provide no more than $2M toward the deal. You have performed a preliminary "but-for" analysis that suggests TIF financing is a possibility. The estimated assessment value (EAV) is $1.5M and the estimated value of the property after the improvements is $14.5M The developer has $2M in equity to contribute to the project. The local county government will provide a forgivable loan in the amount of $25,000 per job created. The local workforce development board will provide support of up to 25% of total labor costs in support of contractors who pay prevailing wages. Assignment

Using the information above, complete sources and uses table for the project proposal. Is there a project gap? If there is a project gap, discuss ways to close that project gap.

SourcesUses

7,000,000 CDBG9,000,000.00 Construction materials

2,000,000 City7,600,000.00 Labor (all labor paid prevailing wages)

2,000,000 Developer Equity650,000.00 Site Acquisition

1,250,000 Job Creation Loan1,500,000.00 Site Clearance

1,500,000750,000.00 Developer Costs

TIF500,000.00 Overhead and Miscellaneous Costs

PACE

Project Gap

20,000,000.00