Therefore, it becomes obvious the DCAD appraisal was not used for the Village negotiations.........so whose appraisal did we use?. For this purpose, remember the building value does not contribute to the "down payment." It will be torn down. Only the land value is used here.
The county appraisal values the building at $2,382,950, and the land is valued at $419,450. The site the library sits on is 3.2 acres, therefore the land value per acre is estimated to be $131,078 per acre. I think the total site to be developed is 15 acres. Therefore, the same value on the complete site would be 15 acres x $131,078, or $1,966,172. The above numbers reflect a square foot price of (43,560 sq. ft. in an acre) $3.00 per square foot. I don't have any downtown vacant lot comparables to check, but that sounds fairly cheap for downtown apartment property yielding 15 units per acre. Some of the residential land off Liberty Grove Road was priced and accepted at $2.00 per foot. Apartment land usually runs a good bit more than residential land......say $4.50-$5.00 a foot. Apartment land in this DFW market in good locations should be carrying a premium price. I would think the land value for the 15 acres should be at least $4.00 per foot.....or $2,613,600.00. Some of the language said "subject to appraisal." Is someone expecting a lower appraisal? I don't know where their appraisal number came from.
I am still worried about the availability of the 380 Grant money. It would appear to me that the city will be obligated to pay for the $1,950,00 (altho earlier in the presentation it is referred to as $2.4 million) in utility improvements.....and to be reimbursed by 380 Grant funding. Furthermore, the city is forgiving 15 years of real estate taxes, again to be reimbursed by 380 Grant funding. Therefore, a total of 15 years of taxes, estimated to be $225,000 per year, or $3,375,000, plus $1,950,000 to be reimbursed by 380 Grant funding for infrastructure improvements creates a potential 380 Grant downside risk of $5,325,000.00. What if the 380 Grant funding never materializes?
That means the city gave up property valued by DCAD of $2.802,050.00 (the library). Also, another 12 acres is contributed that would be valued at $1,572,936.00 (per DCAD), and a potential risk of not receiving 380 Grant reimbursements above of $5,325,000.00. That makes a total investment of $9,699,986.00. If the above worst case scenario develops, the city of Rowlett would be subsidizing the project an average of $646,665.73 per year for the next 15 years and receive no revenue for the project.
At the very least, I think the City of Rowlett owes the citizens a discussion regarding the availability of 380 Grant funding. The Staff Report and the verbal presentation only made a cursory reference to the 380 Grants. I would think that $10 million in funding deserves a little more than a cursory discussion.......indeed, almost no discussion at all.
What we know is we are going to contribute about $2 million in land, building, and impact fees. What we don't know is whether we contribute another $9.5 -$10 million, or not.
What does the developer risk? Not much. A little construction risk and no market risk. The bank and Rowlett is putting in all the money. The developer does not work out of a working capital account. I know lots of people, including me, that know how to build apartments. The Dallas area is filled with architects that can give the city exactly what they want. Maybe we can do the next deal.