RM 07-11-80 - Laserfiche WebLink

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South Bend development Commission Regular Meeting - July 11, 1980 6. NEW BUS Mr. Ellison continues ..... (c) In supplemental observations we simply indicate that it could be argued that no public purpose exists to provide tax abatement to an assisted housing project since the federal government permits the calculation of full real estate taxes in project proposals. Since Section 8 program guarantees the developer both a rental market and adequate general income for a period of up to 40 years, these projects would seem to be able to function economically without the need of further public assistance, such as tax abatement. However, given the current economic situation with respect to housing, the cost of money, the cost of construction, and the cost of operation, many good projects are pushed beyond the point of feasibility. The staff, in order to determine the extent to which this project is feasible, analyzed the HUD financing documents which have been approved relative to the project. We also looked at the financial impact of taxes. Our analysis reveals that the project would not be feasible if the abatement is not granted. This will dictate the need for.the developer to seek higher rent levels from the federal government and since those rent levels and other long term costs to the government are primary factors in project selection, the higher rents, in cur opinion, would render the project ext emely non - competitive and therefore for all practicable purposes, not feasible. The report finds that given the community neec. for additional safe and sanitary houEing, lower income housing, the additional jobs the project offers, the project does provide substantial ben fit which warrants favorable tax abatement consideration. Finally, we went through and calculated the taxes and found that the cost of the abatement to the City over ten years (assuming a level tax rate and a level assessed value) is $457,000.00 or $45,786.00 per year. 18