At the present time, the developer estimates the value at $30 million. This is essentially the developers estimate of cost to build. This is only an indicator of real value. It is something in which to be aware, but not the best approach to value. The best approach for any commercial real estate investment, whether office building, warehouse, or apartment project, is the income approach. The income approach can not presently be evaluated because there is no income. The real value of the Villages is based on how much money it can make.
I am going to ask the Mayor to reveal to us what the value achievement level must be before the Villages go onto the tax rolls. In my opinion, this is not an unfair question. Then, I will show you how to use cap rates to determine value. There must be some reporting obligations that the developer must make to the city. Otherwise, the contractual requirement of the developer for value (income) information is moot. What we would want to know is the NOI (net operating income), and the value in which the project must become before going onto the tax rolls.
Therefore, I think the city should inform the citizenry at what value achievement level the Village must attain before being placed on the tax rolls. You must also remember it must be an "after tax" achievement level.
These are fair questions to ask of "officialdom" if they are going to give away several million dollars of the citizens assets.
The Staff Report suggested that the Villages would contribute $225,000 per year to the tax revenue stream. That number is worth watching.