TN Development Finance in Action-Don Hurst-TN Economic Development Finance Course

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TN Economic Development Finance Course Feb. 20-21, 2014
UT Center for Industrial Services & Council of Development Finance Agencies

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TN Development Finance in Action-Don Hurst-TN Economic Development Finance Course

  1. 1. NEWPORT/COCKE COUNTY Tax Increment Finance TCED UT-CIS February 21, 2014
  2. 2. NEWPORT/COCKE COUNTY MAP
  3. 3. CROWE PROPERTY HIGHWAY 321, EXIT #435, I-40
  4. 4. TIF District Final Estimates Crowe Property Newport/Cocke County Revenues: Anticipated Appraisal Lowe’s Anticipated Appraisal Retail Space Anticipated Appraisal Out lot #1 Anticipated Appraisal Out lot #2 Anticipated Appraisal Out lot #3 Anticipated Appraisal Out lot #4 Anticipated Appraisal Out lot #5 $ $ $ $ $ $ $ Total estimated* $14,000,000. $15,300,000. 40 % Assessment Mil Rate / 100 $ 5,600,000. $ 56,000. $ $ $ Taxes: City rate $2.46 County rate $3.16 Total revenue Less: Current tax base (assessed at $29,850; $735/$945) County Debt Service Rate (7.5%) Net available to service debt Annual debt** Debt coverage ratio **Loan terms Year 1 8,000,000. 5,000,000. 200,000. 200,000. 200,000. 200,000. 200,000. Year 4 8,000,000. 5,000,000. 1,500,000. 1,500,000. 1,500,000. 200,000. 200,000. Year 5-10 $ 8,000,000. $ 5,000,000. $ 1,500,000. $ 1,500,000. $ 1,500,000. $ 1,500,000. $ 200,000. $16,600,000. $17,900,000. $19,200,000. $ 6,120,000. $ 61,200. $ 6,640,000. $ 66,400. $ 7,160,000. $ 71,600. $ 7,680,000. $ 76,800. 137,760. 176,960. 314,720. $ $ $ 150,552. 193,392. 343,944. $ 163,344. $ 209,824. $ 373,168. $ 176,136. $ 226,256. $ 402,392. $ 188,928. $ 242,688. $ 431,616. $ 1,680. $ 1,680. $ 1,680. $ 1,680. $ 1,680. $ $ 23,604. 289,436. $ $ 25,796. 316,468. $ $ 27,988. 343,500. $ $ 30,180. 370,532. $ $ 32,372. 397,564. $ 77,400. $ 267,395. $ 267,395. $ 267,395. $ 267,395. 3.74 $ $ $ $ $ $ $ Year 2 8,000,000. 5,000,000. 1,500,000. 200,000. 200,000. 200,000. 200,000. March 15, 2005 1.18 $ $ $ $ $ $ $ Year 3 8,000,000. 5,000,000. 1,500,000. 1,500,000. 200,000. 200,000. 200,000. 1.28 $ $ $ $ $ $ $ 1.39 1.49 Principle - $2,000,000. Interest rate - 3.87% Term - 10 years (int. only yr #1; amortize yrs. 2-10) $2,000,000. @ 3.87% = $77,400. Yr 1; P&I yrs 2-10 = $267,395. No points, closing costs, negative carry; interest accrues from time of disbursement; upon Lowe’s delivery of Certificate of Occupancy for property. * Assumes one out lot will be sold/developed per year for years 1-4. Assumes only 4 of 5 will be sold.
  5. 5. Debt Estimates Annual debt** Debt coverage ratio **Loan terms $ 77,400. 3.74 $ 267,395. 1.18 $ 267,395. $ 1.28 267,395. 1.39 $ 267,395. 1.49 Principle - $2,000,000. Interest rate - 3.87% Term - 10 years (int. only yr #1; amortize yrs. 2-10) $2,000,000. @ 3.87% = $77,400. Yr 1; P&I yrs 2-10 = $267,395. No points, closing costs, negative carry; interest accrues from time of disbursement; upon Lowe’s delivery of Certificate of Occupancy for property. * Assumes one out lot will be sold/developed per year for years 1-4. Assumes only 4 of 5 will be sold.
  6. 6. New Estimates of Revenue Fast Forward to today and update changes to 3/15/2005 Estimates --After the Reappraisal of City/County for 2005 & new tax rates are known: Year 1 $12,000,000 5,000,000 600,000 600,000 600,000 600,000 600,000 $20,000,000 Year 2 12,000,000 5,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 27,000,000 $361,600 Lowe’s Add. Retail Outlot 1 Outlot 2 Outlot 3 Outlot 4 Outlot 5 $488,160 $2.48 new county rate $2.04 new city rate $4.52 Gross Taxes Less: Current tax base (assessed at $29,850; $735/$945) County Debt Service Rate (7.5%) Net available to service debt P & I payment Debt coverage ratio $ 361,600. $ 488,160. $ 488,160. $ 488,160. $ 488,160. $ 1,680. $ 1,680. $ 1,680. $ 1,680. $ 1,680. $ 27,120. 332,800. $ 36,612. 449,868. $ 36,612. 449,868. $ 36,612. 449,868. $ 36,612. 449,868. $ 267,395. $ 267,395. $ 267,395. $ 267,395. $ 267,395. 1.24 1.68 1.68 Amortization Note – IF - : $2M (PV), $400,000 (PMT), 3.87% (I/Y) = 5.66 (N) years to fully amortize 1.68 1.68
  7. 7. LOWE’S PRESS RELEASE Aug 19, 2005 LOWE’S STORE SLATED FOR NEWPORT- The Do-it-Yourself retailer invests $12 million to build one-stop shop for appliances, furnishings, building materials and lawn/garden products Mooresville, N.C. – A new Lowe’s will soon be underway at U.S. Highway 321 and Epley Road. The new Lowe’s store is expected to open in early 2006. The do-it-yourself retailer is known for helping homeowners find the right equipment and supplies to build, improve, beautify and enjoy their homes. Source: http://www.lowes.com/lowes/lkn?action=frameSet&url=lowes.med iaroom.com/
  8. 8. NEW OUTDOOR ADVERTISING CAMPAIGN
  9. 9. THANK YOU Donald Hurst, CEcD Cocke County Partnership 433 Prospect Avenue Newport, TN 37821 423.623.3008 dhurst@cockecountypartnership.com

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