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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 />