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South Bend Redevelopment Commission <br /> Regular Meeting–June 28, 2012 <br /> 7. PROGRESS REPORTS (CONT.) <br /> Mr. Downes asked whether it is essentially a gap in <br /> financing. Mr. Inks responded that it is. <br /> Mr. Davis asked what the current taxes are on the <br /> property. Mr. Inks stated that it's tax exempt right now <br /> and the assessed value is fairly low. This would be a <br /> $12,000,000 project, and, ordinarily, on a new <br /> construction project assessed value would increase by <br /> 85%to 100% of the construction cost. Rehabs are <br /> significantly lower. In this case the assessed value of <br /> the building is already so low that it's likely the assessed <br /> value would increase by more than usual. That is <br /> creating issues with financing. <br /> Mr. Davis asked what the building was assessed at right <br /> now. Mr. Inks responded with uncertainty that it's <br /> probably a million or less. <br /> Mr. Varner asked if staff has seen what Mavcon has <br /> seen. Mr. Inks responded that it has. Staff has run the <br /> property tax payment schedules and estimates the annual <br /> taxes to be around $225,000. <br /> Mr. Varner wondered if that would hold up the project. <br /> Mr. Relos noted that Mavon is looking at turning it into <br /> 60 apartments renting at market rate. Mr. Varner <br /> thought staff might have the power to negotiate, not <br /> necessarily a tax abatement, but an incremental phase-in <br /> so that they could build the project and grow into the <br /> taxes. Mr. Inks responded that that is why staff asked <br /> for the pro forma—to see what it might take to make it <br /> work. <br /> Mr. Downes stated that Mavcon must feel good about <br /> the market demand. Mr. Relos responded that they do. <br /> Mavcon has been down here several times trying to get <br /> good numbers. <br /> Mr. Downes stated, too, that Mavcon has a good <br /> reputation. <br /> 15 <br />