Reconfirming Tax Abatement - The Villas at Lake Blackthorn - SBRC for benefit of : Coorman Real Estate Group, Inc

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File=d Irt clerk's ~ffiGe ,~ '~~ ~ ` OCT 1 7 ~~'l1 COOREMAN T ris~ . NEIGHBORHOODS ~ 1 ~ _ ~~~~ r fir C!TY G':_:':;~~, Vin. zl:~i:. '~. Dear Common Council Members: 4404 Technology Dr. South Bend, IN 46628 Ph: 574-277-0116 Fax: 574-277-6511 www.cooreman.com October 16, 2007 As Developer of The Villas at Lake Blackthorn (VLB), I wish to submit a resolution for an extension of our existing five-year tax abatement. For Section One of the VLB subdivision the expiration date of the RDA is November 11, 2007, thus time is of the most extreme essence here. I respectively request a waiver of the two weeks requirement for submission, and ask that you consider this resolution at your October 22, 2007 meeting. I apologize for not bringing the matter to the Council in a timelier manner. A number of circumstances contributed to this falling through the cracks in . our system, including major senior level staffing changes within the past year, and a move to our new space on Technology Drive. And quite frankly, until recently, we were under the mistaken impression that the five-year deadline applied only to the length of time an individual property owner could receive the deduction, which also happens to be five years. We also thought the development would be sold out by now - we underestimated the negative impact the higher City taxes would have on our sales pace. In spite of impressive efforts in marketing, infrastructure improvements, and the fact that it is a beautiful neighborhood with rare amenities, the development's sales have not kept pace with the projections. Five years after launch, 53 home sites out of 109 remain unsold, with a significant stagnation in the last 2 years. Even with the abatement in place the higher city taxes prompt many potential buyers to choose county properties instead when they are looking to purchase newer construction. The Villa's sister neighborhood, Westwood Knolls at Blackthorn, which is located just across Orange Road from the Villas, has surpassed sales projections, and the lower County taxes are repeatedly listed as a primary factor in the purchase decision. Thus, as the abatement is set to expire this November, the sales pace is expected to deteriorate further as buyers lose this important incentive. Following is an excerpt of a recent analysis by Stephen Smith, our Director of Sales/Marketing for Cooreman Neighborhoods, which states the case for continued abatement: "The abatement is currently most beneficial to homes $350k and below, because it is a flat $74,800 reduction in assessed value ($2200 on taxes). Homes over $350k might do better with the straight 2.0% circuit breaker than with homestead, mortgage, and abatement, exemptions. That being said, of the remaining lots, only I1 are on the big and little lake, which would support home values in excess of $350k, which means 421ots would benefit most from the abatement. Of those 42, 16 backup directly to the bypass and at least 1 S allow 1400 sq. ft. minimums which translate to a value between $200-$2251c Homes in this price range stand to have their taxes nearly cut in half by the value of the abatement! So in short, we already have experienced a significant decreased sales pace, with great reason to believe the trend will continue. It would be very dill cult to sell a $220k home with $4400 annual taxes to an empty nester, which is currently paying $1000 in taxes annually. Sales of remaining inventory will be greatly impacted by the lack of an abatement. " We have approximately 2.3 million dollars of unsold inventory in this development and would like to sell out in a timely manner as in our other developments. Continued tax abatement status, and any other assistance the City can offer with this project certainly would help, and would also enhance the possibility of additional City projects in the future. Thank you for your time and careful consideration. Regards, Steve Coorema ,Developer Cooreman Real Estate Group, Inc. Residential c~ Commercial Real Estate Land Development Villas at Lake Blackthorn Westwood Knolls at Blackthorn Westwood Hills at Elbel West4vood Shares at Elbel Stone Oak Estates • New Prairie Knolls • Boulder Bay Wintergreen Meadows