Planning Commission

Spearfish Planning Commission Agenda October 3, 2023 at 3:00 p.m. Meeting Location: City Council Chamber, 625 Fifth Street, Spearfish, SD And Zoom Online Meeting Join Zoom Meeting https://us02web.zoom.us/j/83971284645 Meeting ID: 839 7128 4645 Or Dial in: +1 669 444 9171 and enter Meeting ID A. Call To Order B. Roll Call C. Approve the Minutes from September 19, 2023 D. Approve Agenda E. Declaration of Conflicts of Interest F. Items for Action 1. Request: Approve a Change of Zoning from Heavy Industrial District to C2 Highway Commercial District Location: West of the Intersection of Colorado Boulevard and Maitland Road Applicant: City of Spearfish Action: Consider the rezone request prior to holding a public hearing during the October 17, 2023 Planning Commission Meeting 2. Request: Approve the Tax Increment Finance (TIF) District 7 Project Plan Location: Southwest of Intersection Hill Street and Harvard Street Applicant: Stencil Group, LLC Action: Hold a Public Hearing and Make a Recommendation to City Council G. Items for Discussion 1. Planning Studies - Project Updates 2. Short Term Rental Discussion H. City Council Update I. Public Comment - Public comments are welcome at this time, however, no action will be taken. J. Adjournment  Spearfish Planning Commission Regular Session Minutes September 19th, 2023 at 3:00 p.m. The Spearfish Planning Commission met in regular session on Tuesday, September 19th at 3:00 p.m. in the council chamber of city hall and via Zoom video conference. Greg Kruskamp chaired and the meeting was called to order at 3:00 p.m. Roll call was taken with the following members present: Rick Tysdal, Toby Bordewyk, Meghan Byrum, Bob Myer, Larry Vavruska (joined at 3:40), Greg Kruskamp, and Amy Davison. Also present: Marlo Kapsa, Planning Director, Ashley McDonald, City Attorney, Steve McFarland, City Administrator, John Senden, Mayor, Jaymia Ecker, Assistant Planning Director and Kyle Mathis, City Engineer. APPROVAL OF MINUTES: Byrum moved, Bordewyk seconded, and all voted to approve the minutes of the September 5th, 2023 Planning Commission meeting. APPROVAL OF AGENDA: Tysdal moved, Byrum seconded, and all voted to approve the agenda of the September 19th, 2023 Planning Commission meeting as presented. DECLARATIONS OF CONFLICTS OF INTEREST: Kruskamp called for any potential conflicts of interest to be identified. Kruskamp disclosed that he sits on the board of the Northern Hills Training Center but did not feel that this rose to the level of a conflict of interest. ITEMS FOR ACTION 1. Request: Approve a Voluntary Annexation and Change of Zoning from County Park Forest to R3 Multi-Family Residential District Location: Southwest of Intersection Hill Street and Harvard Street Applicant: Stencil Group, LLC Kapsa stated that there have been no changes to the proposed project since the last staff report was presented at the September 5th Planning Commission Meeting. She summarized the staff report noting that the annexation involves approximately 10 acres of property and the proposed rezoning of the property to R3 is in line with adjacent land uses including a multi-unit condo and training center. The developer intends to develop the property with two 95-100 unit apartment buildings. Kapsa noted that the proposal meets standards for annexation and rezone, is in line with the comprehensive plan, and will contribute to the supply of rental units projected to be needed by 2030 in the Rapid City and Black Hills Area Housing Study. Kapsa summarizing comments and concerns received prior to the meeting including parking issues and impacts to viewshed. They confirmed that the proposed development meets all minimum standards and will require a traffic impact study to be conducted prior to issuing any a building permit. Kapsa concluded that city staff recommend approval of the annexation and change of zoning. Nate Stencil, the developer and CEO of Stencil Group, joined remotely sharing that they have been in coordination with the landowner in the planning phase of this project for over a year and excited to bring this project to Spearfish. A commission member inquired about the potential outcomes of the traffic impact study. These may include requiring acceleration/deceleration lanes and or intersection control measures. The developer will also be required to improve the adjacent section of Hill Street including adding sidewalk and bike lanes. Kruskamp opened the public hearing. Comments were received from community members around the themes of traffic, increased run off, change in current land use, externalities affecting neighbors, and pedestrian safety. Providing testimony were Rick McBride, Tracy Logan, Stan Triplett, Bill Hoffman, Rick Boyd, Nancy Boyd, Allden Heidie, Kiah Crowley, Bob Young, and Carolyn Sander. McFarland encouraged attendees to get involved in the process to update the City’s comprehensive plan. An open house will be held on October 18th from 5:30-7:30 PM at the City Park Pavilion. Following comments, Kruskamp closed the public hearing. Myer moved, Byrum seconded and all voted to approve the voluntary annexation and change of zoning from county park forest to R3 multi-family residential district. The item will go before City Council at the October 2nd meeting for consideration. ITEMS FOR DISCUSSION Planning Studies – Project Updates Highway 85 Corridor study – consultant is working on a summary of report of public engagement session held in July. Colorado Boulevard – Staff is exploring grant funding opportunities. No other major updates. Comprehensive Plan Update – Project team is preparing for upcoming open house. Planning Commission Update After serving on the commission for 31 years, Myer expressing his gratitude toward fellow commission members and the city and concluded by expressing his desire to pass the role on. The mayor presented an appreciation award. City Council Update Dylan Wilde was appointed to the Planning Commission. PUBLIC COMMENT No comments were provided. ADJOURNMENT The meeting was adjourned at 4:48 PM.  Spearfish Planning Commission Staff Report Meeting Location: 625 Fifth Street, Spearfish SD, Council Chamber of City Hall and by Zoom Online Meeting Meeting Date and Time: October 3, 2023 at 3:00 p.m. Applicant: City of Spearfish Request: Approve a Change of Zoning from Heavy Industrial District to C2 Highway Commercial District Action: Consider the rezone request prior to holding a public hearing during the October 17, 2023 Planning Commission Meeting Location: West of the Intersection of Colorado Boulevard and Maitland Road Proposal Summary: The proposed request would annex one acre of property from Heavy Industrial District to C2 Highway Commercial District (C2). The proposed rezone is in alignment with Land Use and City Form goals and strategies set forth within the City’s Comprehensive Plan and aligns with existing surrounding zoning and land use. The proposed rezone would bring a currently legal conforming Page 1 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m. office building use into compliance with City Zoning regulations. General Comments: The proposed rezone to C2 generally aligns with existing surrounding city zoning. Property lying north and west of the subject property is zoned C2 with a mix of uses including storage units, boat sales, an indoor golf facility, and office spaces. The property directly east of the subject property is currently zoned Heavy Industrial District and is largely undeveloped aside from a few remaining outbuildings. The property to be rezoned is currently developed with an office building, which was a legal non-conforming use when the property was annexed. The rezone to C2 District would allow for future office use of the building to be compliant with City zoning regulations. Staff Review: This change of zoning is guided by the City of Spearfish Revised Code of Ordinances, Appendix A- Zoning, Article VI. Administration and Enforcement, Section 5. Amendments. A proposed amendment shall be considered on its own merits using the following criteria as a guide. Proposed amendments shall: 1. Be necessary because of substantially changed or changing conditions of the area and district affected, or in the ordinance generally. a. The subject property used to be home to the former McLaughlin Sawmill. The property was purchased by the City in late 2017. The existing zoning of the property is Heavy Industrial District which aligned with the use of a sawmill. The sawmill use no longer exists and the area surrounding the site has since developed with commercial uses allowed within the C2 district. The proposed rezone would allow the existing office building to function as an office space moving forward and will better reflect the more commercial needs of the surrounding area. 2. Be consistent with the intent and purposes of the ordinance: a. The purpose and intent of the R3 Multi-Family Residential District is “established for the accommodation of retail and business service activities and are typically located and grouped along a major street, street intersection or highway interchange, generating a considerable volume of vehicular traffic.” The subject property is located along Colorado Boulevard, a major arterial street, and is developed with an office building. An office space would be considered a permitted use within the C2 District. As such, the proposed rezone aligns with the purpose and intent of the ordinance. 3. Not directly or indirectly adversely affect any other part of the ordinance. a. There are no proposed changes to the text of the zoning ordinance associated with this rezone, therefore, this criterion is not applicable. 4. Be consistent with and not in conflict with the Spearfish comprehensive plan. a. The proposed development aligns with the following Strategies for the Developing City set forth within the Comprehensive Plan: i. “The overall location and arrangement of land uses for new development should follow a basic hierarchy starting with the more intense land uses on the Page 2 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m.  ii. major streets, and the less intense uses on the minor/local streets.” 1. The subject property is located adjacent to Colorado Boulevard which is classified as an arterial Street in the City’s Master Transportation Plan. The existing development of this site aligns with the surrounding commercial development along a rapidly developing major commercial corridor. iii. Encourage the adaptive re-use of existing structures and under-utilized lands to raise the visual quality and vitality in the community, reduce sprawl, and make efficient use of existing community infrastructure. 1. Rezoning of the subject property will ensure the existing office building continues to see permitted use in line with the surrounding development. Public Comment: Notice of a public hearing will be published in the newspaper and sent to owners within 200 feet of the property boundary 10 days prior to the public hearing. Any comments received will be included in the Staff Report and discussed during the meeting. Summary: The proposed rezone aligns with adjacent zoning and land uses, complies with the City’s Zoning Ordinance, and realizes land use and city form strategies set forth within the City’s Comprehensive Plan. As such, staff would recommend approval of the proposed rezone. STAFF CONTACT: Marlo Kapsa – Planning Director, 605-717-1122; marlo.kapsa@cityofspearfish.com ATTACHMENTS: Page 5 – Zoning Map Page 3 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m. Zoning Map Page 4 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m.  Spearfish Planning Commission Staff Report Meeting Location: 625 Fifth Street, Spearfish SD, Council Chamber of City Hall and by Zoom Online Meeting Meeting Date and Time: October 3, 2023 at 3:00 p.m. Applicant: City of Spearfish Request: Approve the Tax Increment Finance (TIF) District 7 Project Plan Action: Hold a Public Hearing and Make a Recommendation to City Council Location: Southwest of Intersection Hill Street and Harvard Street Proposal Summary: The proposed request would create Tax Increment District 7 (TID 7) as shown above. All qualifying costs would be fronted by the developer and would support development of two new 95–100-unit apartment buildings made available to renters who make at or below 80 percent of Page 1 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m. area median income (AMI). The amount of $4,941,090 will be the maximum amount the City will ever pass on acting as a conduit for TIF #7. General Comments: State law requires that the Planning Commission forward a recommendation to the City Council on the Tax Increment District Project Plan. The Planning Commission’s scope of review is to evaluate if the plan addresses the primary topics contained in state law, and to comment on components within the plan. The table of contents contains an overview of all the plan requirements as required by state law. The driving interest in the establishment of this Plan is to offer tax increment financing as a tool to stimulate and leverage private sector development and redevelopment, and to promote economic development throughout the District by providing affordable housing. The intention of this TIF Project is to increase the availability of affordable housing as well as improve community infrastructure in the City of Spearfish. The multifamily units will be rented at 80% AMI. This Plan outlines the total costs of the project, the amounts of project costs to be reimbursed by the tax increment district, and financial impacts to the City, County, and School District while the TIF revenues are paying back the debts of the project. The repayment of TIF debt is authorized for up to twenty years after the district is created. The Developer anticipates the project costs in acquiring, developing, financing and preparing the TIF Property for sale, lease and/or development will meet or exceed Four Million Nine Hundred Forty One Thousand Ninety Dollars. Certain of these costs would be considered TIF-eligible costs within the meaning of SDCL § 11-9-14 and SDCL § 11-9-15. The Developer anticipates requesting reimbursement of those eligible reimbursement costs that relate to site work, street and utility build-out, and engineering, together with financing costs. The amount of $4,941,090 will be the maximum amount the City will ever pass on acting as a conduit for TIF #7. This amount will include any and all interest associated with the debt and the controlling value of the TIF will never pay more than $4,941,090. All TIF revenue will be passed onto the Developer until the full amount has been paid or 20 years from the year of creation, whichever happens first. Public Comment: The project plan was forwarded to Lawrence County and Spearfish School District for their comment. Notice of the hearing was published in the official paper of the City a minimum of 10 days prior to the meeting. No comments have been received as of this writing. Summary: The driving interest in the establishment of this Plan is to offer tax increment financing as a tool to stimulate and leverage private sector development and redevelopment, and to promote economic development throughout the district by providing affordable housing. Staff finds the Plan to meet all minimum statutory requirements for the establishment of a TID. As such, staff would recommend approval of the proposed TID. STAFF CONTACT: Marlo Kapsa – Planning Director, 605-717-1122; marlo.kapsa@cityofspearfish.com Page 2 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m. ATTACHMENTS: Page 4 – Elevation Page 5 – Site Plan Page 6-43 – Tax Increment District #7 Plan Page 3 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m. Elevation Page 4 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m. Site Plan Page 5 Spearfish Planning Commission Staff Report Meeting Date: October 3, 2023 at 3:00 p.m.  TAX INCREMENT FINANCE DISTRICT #7 TAX INCREMENT FINANCE DISTRICT #1 TAX INCREMENT FINANCE DISTRICT #1 TAX INCREMENT FINANCE DISTRICT #1 TAX INCREMENT FINANCE DISTRICT #1 Submitted by: TAX INCREMENTobin F J. Morris INANCE DISTRICT #1 Colliers Securities On behalf of The City of Spearfish TAX INCREMENT FINANCE DISTRICT #1 Created: July 2023 TAX INCREMENT FINANCE DISTRICT #1 Colliers Securities 124 West Dakota Ave| Pierre, SD 57501 TAX INCREMENT F INANCE DISTRICT #1 Tobin.morris@colliers.com | Page 1  Table of Contents Introduction – The Project ................................................................................................................ 2 Creation of City of Spearfish Tax Increment District #7 ............................................................... 8 Taxable Value of City of Spearfish................................................................................................... 9 Kind, Number, Location, and Detailed Costs of Proposed Public Works and Improvements SDCL § 11-9-13(1)............................................................................................................................ 10 Feasibility Study, Economic Development Study, and Fiscal Impact Statement ...................... 14 Method of Financing, Timing of Costs and Monetary Obligations............................................. 15 Estimated Impact of Tax Increment Financing on Revenues of Taxing Jurisdictions ............. 16 Maps .................................................................................................................................................. 17 Supplementary Findings ................................................................................................................. 18 Changes to City & County Comprehensive/Master Plan Map, Building Codes & City Ordinances per SDCL §11-9-16 (4) ................................................................................................ 18 List of Estimated Non-Project Costs .............................................................................................. 18 Statement of Displacement and Relocation Plan .......................................................................... 18 Performance Bond, Surety Bond or Other Guaranty .................................................................. 18 List of Schedules............................................................................................................................... 19 Schedule 1 ......................................................................................................................................... 20 Schedule 2 ......................................................................................................................................... 22 Schedule 3 ......................................................................................................................................... 24 Schedule 4 ......................................................................................................................................... 26 Schedule 5 ......................................................................................................................................... 27 List of Attachments .......................................................................................................................... 28 Attachment 1 .................................................................................................................................... 29 Attachment 2 .................................................................................................................................... 30 Attachment 3 .................................................................................................................................... 31 Attachment 4 .................................................................................................................................... 33 Attachment 5 .................................................................................................................................... 34 Attachment 6 .................................................................................................................................... 35 Colliers Securities LLC Page 1  INTRODUCTION – THE PROJECT Tax Increment Financing (TIF) is an incentive utilized by local governments to attract private development and investment. New investment equals new jobs, more customers, and in turn, more investment opportunity. The incentive can also help attract and retain existing businesses and workers that might otherwise find more attractive options elsewhere. The jobs and additional investment, both private and public, mean more money for the community. Tax Increment Financing helps to overcome costs that often prevent redevelopment and private investment from occurring in the community. As a result, the TIF area itself improves and property values increase. Specifically, money for improvements and other incentives comes from the growth in property valuations and the corresponding property tax revenues — the tax increment. A tax increment is the difference between the amount of property valuation present within the TIF district before TIF district designation and the amount of property valuation increase due to the creation of a TIF district. Property taxes collected on the original valuation existing in the TIF at the time of its designation continue to be distributed to the city, school district, county and all other taxing districts in the same manner as if the TIF district did not exist. Only property taxes collected as a result of the incremental increase in the value of these properties after formation of the TIF district are available for use by the counties or cities to fund projects costs in the TIF district. In addition to increasing property valuation, creating a Tax Increment District for the benefit of affordable housing can mean retaining and creating more jobs. Today’s business climate allows corporations the flexibility to call any state in the union their home. It is up to local communities to attract and retain companies to their communities. Using Tax Increment Financing is one of the most powerful economic development tools to help communities achieve their goals. A local government, per South Dakota Codified Law, Chapter 11-9, can designate a specific area within its boundaries as a redevelopment area appropriate for a TIF district and prepare a plan for development. TIF projects must be recommended for approval by the County or City Planning Commission and the City Council. The intention of this TIF Project is to provide affordable housing in City of Spearfish for the local workforce. The Project will consist of increasing the availability of affordable housing, including providing the necessary infrastructure for the development. The development will consist of two apartment buildings, each containing 95 or more units. The Developer, Stencil Group, has extensive experience in multifamily construction and property management throughout Minnesota and South Dakota. The Developer’s focus is market rate and affordable housing options. Unlike most other development companies, Stencil Group designs, builds, and manages many of their multifamily developments. This allows them to offer more affordable housing rates than most other developers. The following are some of Stencil Group’s completed multifamily projects: • 5th Street Lofts, Northfield, MN - 79 units • Dakota Estates I, Aberdeen, SD - 65 units • Dakota Estates II, Aberdeen, SD – 72 units • Dakota Estates III, Aberdeen, SD – 127 units Colliers Securities LLC Page 2  • Edgerton Place I, Mitchell, SD – 65 units • Edgerton Place II, Mitchell, SD – 72 units • Flats at Neill Park, Burnsville, MN – 120 units • Flats on 21, Austin, MN – 82 units • Flats on 4th, Rochester, MN – 92 units 5th Street Lofts, Northfield, MN Dakota Estates I, Aberdeen, SD Flats at Neill Park, Burnsville, MN Colliers Securities LLC Page 3  Purpose & General Definitions The property upon which this Tax Incremental District (TID) is proposed to be implemented is located within City of Spearfish, South Dakota. As such, the creation of City of Spearfish TIF #7 shall be conditioned upon the creation of the District by resolution, and the establishment of the TID boundaries and approval of the TID Project plan by the City Planning and Zoning Commission. The purpose of this Plan, to be implemented by City of Spearfish, South Dakota is to satisfy the requirements for a Tax Increment District Number 7 as specified in SDCL Chapter 11-9. The principal purpose of the Plan is to define eligible property and to define a Tax Increment Plan for funding eligible activities in an eligible area of the City. The Plan will describe the boundary, estimated costs, feasibility and fiscal impact of the District. This Plan was prepared for adoption by the City Council in recognition that the area requires a coordinated, cooperative strategy, with financing possibilities, to promote affordable housing and accomplish the City’s development objectives for improving the continued viability by promoting economic development within the City of Spearfish. The driving interest in the establishment of this Plan is to offer tax increment financing as a tool to stimulate and leverage private sector development and redevelopment, and to promote economic development throughout the District by providing affordable housing. The intention of this TIF Project is to increase the availability of affordable housing as well as improve community infrastructure in the City of Spearfish. The multifamily units will be rented at 80% AMI. The proposed multifamily development is located on the western side of Spearfish, along Hill Street. The proposed apartment complex will be for the benefit of workforce housing. Currently, the City of Spearfish is experiencing a shortage of housing and the proposed development will help alleviate that need. From the years 2010 to 2020, the City of Spearfish experienced a population increase of 1,507 residents or 15%. The City is expected to continue growing over the course of the next decade. According to the 2023 Rapid City Housing Market Study, the City of Spearfish will experience a population increase of more than 10% or an estimated population of 12,918 by the year 2030. Colliers Securities LLC Page 4  Due to the continued growth of the City of Spearfish, the demand for additional housing options has also increased. The 2023 Rapid City Housing Market Study recommends 224-281 additional rental units by the year 2030 in the City of Spearfish. The table below shows the housing demand by affordability. It should be noted that as an “affordable housing” TIF, rents cannot exceed 80% AMI. Colliers Securities LLC Page 5 General Definitions The following terms found in this Plan are defined as the following: “Base” or “Tax Incremental Base” means the aggregate assessed value of all taxable property located within a Tax Incremental District on the date the district is created, as determined by SDCL § 11-9-20. “Blighted or Economic Development” SDCL § 11-9-8. (1) Not less than twenty-five percent, by area, of the real property within the district is a blighted area or not less than fifty percent, by area, of the real property within the district will stimulate and develop the general economic welfare and prosperity of the state through the promotion and advancement of industrial, commercial, manufacturing, agricultural, or natural resources; and (2) The improvement of the area is likely to enhance significantly the value of substantially all of the other real property in the district. “City Council” means the City Council of Spearfish, South Dakota “Calendar Year” means the starting date of January 1 to an ending date of December 31st. “Department of Revenue” means the South Dakota Department of Revenue. “Developer” means Stencil Group, LLC “Developer’s Agreement” means the agreement between Developer and City of Spearfish concerning this Tax Incremental District. “District” means the Tax Incremental District. “Economic Development” means all powers expressly granted and reasonably inferred pursuant to SDCL § 9-54. “Fiscal year” means that fiscal year for City of Spearfish “Generally Applicable Taxes” shall have the same meaning as set forth in 26 CFR § 1.141-4€. “Governing body” means the Spearfish City Council “Grant” means the transfer for a governmental purpose of money or property to a transferee that is not a related party to or an agent of the municipality; “Infrastructure Improvements” means a street, road, sidewalk, parking facility, pedestrian mall, alley, bridge, sewer, sewage treatment plant, property designed to reduce, eliminate, or prevent the spread of identified soil or groundwater contamination, drainage system, waterway, waterline, water storage facility, rail line, utility line or pipeline, or other similar or related structure or improvement, together with necessary easements for the structure or improvement, for the benefit of or for the protection of the health, welfare, or safety of the public generally. “Planning Commission” means the City of Spearfish Planning Commission Colliers Securities LLC Page 6 “Plan” means this Project Plan. “Project Costs” means any expenditure or monetary obligations by City of Spearfish, whether made, estimated to be made, incurred or estimated to be incurred, which are listed as Project Costs herein will include any costs incidental thereto but diminished by any income, special assessments, or other revenues, other than tax increments, received, or reasonably expected to be received, by City of Spearfish in connection with the implementation of this Plan. “Project Plan” means a properly approved Plan for the development or redevelopment of a tax incremental district including all properly approved amendments thereto as recommended pursuant to SDCL § 11-9-13. “Public Works” means the Infrastructure Improvements, the acquisition by purchase or condemnation of real and personal property within the Tax Incremental District and the sale, lease, or other disposition of such property to private individuals, partnerships, corporations, or other entities at a price less than the cost of such acquisition which benefit or further the health, safety, welfare and economic development of the City and Project Costs. “Taxable Property” means all real taxable property located in a Tax Incremental District. “Tax Incremental District” means a contiguous geographic area within a City defined and created by resolution of the governing body and named City of Spearfish Tax Incremental District #7 “Tax Increment Valuation” is the total value of the Tax Incremental District minus the tax incremental base pursuant to § 11-9-19. “Tax Increment Law” means South Dakota Codified Laws Chapter 11-9. Colliers Securities LLC Page 7  CREATION OF CITY OF SPEARFISH TAX INCREMENT DISTRICT #7 Representatives of the Developer have approached officials of City of Spearfish regarding the possibility of creating a Tax Incremental Financing District (“TID”) to assist in the Project Costs within the Plan on land located within the City of Spearfish, South Dakota. The TID will consist of creating a new housing development in the City of Spearfish and all necessary infrastructure needs. Affordable housing is important to the economic vitality of communities. It can attract and retain employees to a community, supporting the local workforce so they can live close to their jobs. In revitalizing communities, the construction of affordable housing units can also help to stimulate economic growth. Property Within Tax Increment #7 The real property to be located within the Tax Increment District is within the boundaries of the City of Spearfish and described as follows: • LOT 1 AND LOT 2 OF THE NE1/4NE1/4 OF SECTION 16, T6N, R2E, BHM, SPEARFISH, LAWRENCE COUNTY, SOUTH DAKOTA AND AND INCLUDING THE HILL STREET RIGHT-OF-WAY IMMEDIATELY ADJACENT TO THE ABOVE DESCRIBED LOCATION, HILL STREET RIGHT-OF-WAY ADJACENT TO LOT 1 AND LOT 2 BLOCK 1 OF THOMSON ADDITION, ALL LOCATED IN SECTION 16, T6N, R2E, BHM, SPEARFISH, LAWRENCE COUNTY, SOUTH DAKOTA. (TO BE KNOWN AS LOT 3 AND LOT 4 OF BLOCK 1 OF THOMSON ADDITION) All Located in the City of Spearfish, Lawrence County, South Dakota including within and adjacent rights-of-ways. Colliers Securities LLC Page 8  TAXABLE VALUE OF CITY OF SPEARFISH State law requires that tax increment districts cannot exceed ten percent of the taxable value of a municipality. The 2023 Taxes Payable value for City of Spearfish is $1,349,985,432. The base value of the taxable property for inclusion into this Tax Incremental District #7, as estimated but not yet verified by Lawrence County Director of Equalization, is $45,390. 11-9-7. Maximum percentage of taxable property in municipality permitted in districts. In order to implement the provisions of this chapter, the resolution required by § 11-9-5 shall contain a finding that the aggregate assessed value of the taxable property in the district plus the tax incremental base of all other existing districts does not exceed ten percent of the total assessed value of taxable property in the municipality. There is currently three other active TIF districts in the City of Spearfish. Using the estimates provided for TID #7, the value of all existing Tax Increment Districts combined is less than 1.0% of the total 2023 Taxable Valuation. City of Spearfish Tax Increment Base Value District 1 $231,701 4 $1,921,358 6 $87,353 7 $45,390 Total $2,285,802 City of Spearfish Taxable Value $1,349,985,432 All TIF Base Value Must be Less than 10% $134,998,543 Colliers Securities LLC Page 9  KIND, NUMBER, LOCATION, AND DETAILED COSTS OF PROPOSED PUBLIC WORKS AND IMPROVEMENTS SDCL § 11-9-13(1) In order to implement the provisions of SDCL Chapter 11-9, the following are Project Costs and expenditures made or estimated to be made and the monetary obligations incurred or estimated to be incurred. The Project Costs include capital costs, financing costs, real property assembly costs, professional fee costs, imputed administration costs, relocation costs, organizational costs, discretionary costs and grants, plus any costs incidental thereto. All Project Costs are found to be necessary and convenient to the creation of the Tax Incremental District and its implementation. The project constitutes economic development which is a proper public purpose of the City. The City exercises the powers expressly stated in and reasonably inferred by SDCL §11-9-15 and Chapter 9-54. The City shall enter into all contracts in accordance with South Dakota Law. Costs of Public Works and Improvements In accordance with SDCL § 11-9-14 the following is the kind, number, location and dollar amount of estimated Project Costs, costs of public works and improvements. The following are estimated costs of the Project: 1 2 Kind of Project Location Amount Reference Capital Costs (Street, Water District 11-9-15(1) & Sewer) (cleaning & grading of land & associated costs)2 Financing Costs District 11-9-15(2) Real Property Assembly District 11-9-15(3) Professional Fees District 11-9-15(4) Administrative Costs District 11-9-15(5) Relocation Costs District 11-9-15(6) Organizational Costs District 11-9-15(7) Discretionary Costs and District $4,941,090 11-9-15(8) Grants Eligible Project Costs $4,941,090 Colliers Securities LLC Page 10 The above are estimates of the costs involved in the project; the final total may be greater or smaller. An itemized listing of the estimated costs is set forth on Schedule 1. Because the cost estimates are only projected expenditures, the total authorized TID costs is expected to be $4,941,090. This amount is the controlling value with respect to authorized TID Project Costs rather than the particular line item amounts contained in the above Chart and Schedule 1. The line item categories proposed are for guidance only, and actual costs will be determined upon completion of the improvements. The above total represents eligible Project Costs. Only such amounts as are feasible will be allowed by the City or by monetary obligation. 1District shall mean the Tax Increment District. 2SDCL §11-9-15 (1) Capital costs, including the actual costs of the construction of public works or improvements, buildings, structures, and permanent fixtures; the demolition, alteration, remodeling, repair, or reconstruction of existing buildings, structures, and permanent fixtures; the acquisition of equipment; the clearing and grading of land; and the amount of interest payable on tax incremental bonds or notes issued pursuant to this chapter until such time as positive tax increments to be received from the district, as estimated by the Project Plan, are sufficient to pay the principal of and interest on the tax incremental bonds or notes when due; (2) Financing costs, including all interest paid to holders of evidences of indebtedness issued to pay for Project Costs, any premium paid over the principal amount thereof because of the redemption of such obligations prior to maturity and a reserve for the payment of principal of and interest on such obligations in an amount determined by the governing body to be reasonably required for the marketability of such obligations; (3) Real property assembly costs, including the actual cost of the acquisition by a municipality of real or personal property within a tax incremental district less any proceeds to be received by the municipality from the sale, lease, or other disposition of such property pursuant to a Project Plan; (4) Professional service costs, including those costs incurred for architectural, planning, engineering, and legal advice and services; (5) Imputed administrative costs, including reasonable charges for the time spent by municipal employees in connection with the implementation of a Project Plan; (6) Relocation costs; (7) Organizational costs, including the costs of conducting environmental impact and other studies and the costs of informing the public of the creation of tax incremental districts and the implementation of project plans; and (8) Payments and grants made, at the discretion of the governing body, which are found to be necessary or convenient to the creation of tax incremental districts or the implementation of project plans. Colliers Securities LLC Page 11  Conditions of the Developer Agreement relating to Constitutional Debt It is specifically a condition of the proposed Developer’s Agreement that the City's obligation to pay is limited to the proceeds of the positive tax increment from the TID receipted into the TIF Fund. The obligation of the City to pay pursuant to the proposed Agreement does not constitute a general indebtedness of the City or a charge against the City's general taxing power. The provisions of SDCL 11-9-36 are specifically incorporated within the Agreement by reference. It is also to be specifically agreed that the City has made no representation that the proceeds from such Fund shall be sufficient to retire any indebtedness incurred by Developer. The parties further acknowledge that SDCL 11-9-25 limits the duration of allocation of the positive tax increment payments and the fund created by the TID. Additionally, the City’s obligations to make the payments set forth in the proposed Agreement shall be lawfully made from funds to be budgeted and appropriated on an ANNUAL BASIS for that purpose during the City's then current fiscal year, thus not counting towards Constitutional Debt. If at any time during the term of this Agreement, the governing body of the City shall fail or refuse to approve or authorize the funds due hereunder, then the Agreement shall terminate upon the end of the fiscal year for which funds were approved or authorized, without penalty to the City. The City's obligation hereunder shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor shall anything contained herein constitute a pledge of the general credit, tax revenues, funds or moneys of the City. Notwithstanding anything to the contrary contained in the proposed Agreement, the City hereby acknowledges and agrees that the obligations of the City under this Agreement are a material inducement for Developer to incur various development and construct improvements upon the TID property and the failure to pay tax increment to Developer will be financially detrimental to future improvements on said property. The Developer anticipates the project costs in acquiring, developing, financing and preparing the TIF Property for sale, lease and/or development will meet or exceed Four Million Nine Hundred Forty One Thousand Ninety Dollars. Certain of these costs would be considered TIF- eligible costs within the meaning of SDCL § 11-9-14 and SDCL § 11-9-15. The Developer anticipates requesting reimbursement of those eligible reimbursement costs that relate to site work, street and utility build-out, and engineering, together with financing costs. It is further understood that the amount of $4,941,090 will be the maximum amount the City will ever pass on acting as a conduit for TIF #7. This amount will include any and all interest associated with the debt and the controlling value of the TIF will never pay more than $4,941,090. All TIF revenue will be passed onto the Developer until the full amount has been paid or 20 years from the year of creation, whichever happens first. The payment of tax increment funds under this Agreement is a Grant under Chapter 11-9 of the South Dakota Codified Laws (the “Grant”). The Grant is a personal property right vested with the Developer on the effective date of this Agreement. The City will Grant this amount to the Developer and thus not have to account for any assets on the City’s financial statement. The Developer will be responsible for obtaining their financing and the City will not be liable for any Developer debt. Colliers Securities LLC Page 12 Upon completion of the construction of the infrastructure improvements, the Developer shall certify to the City’s Finance Officer the costs of construction, including capital costs, Professional Fees, and contingency costs. The Developer shall provide contractor/supplier invoices or other supporting documentation upon request of the Finance Officer. Upon certification and verification of costs, the City shall pay all available tax increment fund revenues not to exceed $4,941,090. Expenditures Exceeding Estimated Cost Any expenditures, which in sum would exceed the total amount of the TID amount of $4,941,090 will require an amendment of this Plan. All amendments would be undertaken pursuant to SDCL §11-9- 23. When the expenditures within the Plan are increased in excess of more than 35 percent of the total above, the Department of Revenue will be required to reset the base, in accordance with SDCL §11- 9-23. If the Project Costs are not provided for in the original plan, the governing body would be required to amend the plan which requires the South Dakota Department of Revenue to re-determine the tax increment base when additional Project Costs are added to a plan. SDCL §11-9-23. Colliers Securities LLC Page 13  FEASIBILITY STUDY, ECONOMIC DEVELOPMENT STUDY, AND FISCAL IMPACT STATEMENT Detailed List of Estimated Project Costs Attached as Schedule 1 is a detailed list of estimated Project Costs for each of the phases of the project as per SDCL § 11-9-13(3). No expenditure for Project Costs is provided for more than five years after the District is created. Feasibility Study An economic feasibility study per SDCL § 11-9-13(2) is attached as Schedule 2. Economic Development Study Attached is Schedule 3 an Economic Development Study showing the impact of the Tax Increment District, until and after the bonds are repaid, upon all entities levying property taxes in the district. Required as per SDCL § 11-9-13(4). Fiscal Impact Statement Attached is Schedule 4 a Fiscal Impact Statement showing the impact of the Tax Increment District, until and after the bonds are repaid, upon all entities levying property taxes in the district. Required as per SDCL § 11-9-13(4). Colliers Securities LLC Page 14 METHOD OF FINANCING, TIMING OF COSTS AND MONETARY OBLIGATIONS The payment of Project Costs is anticipated to be made by the City to Developer from the special fund of the Tax Incremental District. SDCL § 11-9-13(5). Pursuant to the Developer’s Agreement, the City will pay to the Developer all available tax increment funds it receives from the District. Maximum Amount of Tax Increment Revenue The maximum amount of tax increment revenue bonds or monetary obligations to be paid through Tax Increment District #7 shall be the amount sufficient to reimburse the City for the payments made for Project Costs and pay all tax increment bonds or monetary obligations in an amount not to exceed $4,941,090 principal and interest or such lesser amount as may be feasible with the estimated revenue generated by the Tax Increment District. The final terms and conditions will be set forth in the Developer’s Agreement. Duration of Tax Increment Plan The duration of the Plan will extend to the number of years it will take for the reimbursement of the City, the extinguishment of bonds and the monetary obligation except that the Plan duration shall not exceed 20 c al en d ar years of revenue from the date of creation of the District. Colliers Securities LLC Page 15  ESTIMATED IMPACT OF TAX INCREMENT FINANCING ON REVENUES OF TAXING JURISDICTIONS The site will generate taxes to the local jurisdictions at or above the assessed value of the base. All taxing districts shall receive the taxes from that base which will be the value set for 2022 taxes payable in 2023. The tax increment will be available to the taxing jurisdictions at or before twenty years after the creation of the District. Schedule 5 details the tax capture implications to each of the local taxing jurisdictions. After the repayment of the bonds and monetary obligations, taxing entities will receive their proportionate share of tax dollars for the base value and the tax incremental values. Mechanisms are built within State Codified Law to ensure that school districts are held harmless by TIF districts for their General and Special Education Funds. For these purposes, law (SDCL 13-13- 10.2) defines four classifications of TIFs: • Economic Development - Any area where there is or will be one or more businesses engaged in any activity defined as commercial or industrial by the governing body that has zoning authority over the land contained within the tax incremental district • Industrial – Any factory or any business engaged primarily in the manufacturing or assembly of goods, the processing of raw materials, and the wholesale distribution of products for resale • Affordable Housing – Includes an area where: 1. The original selling price of any house in the district will be at or below the first-time homebuyer purchase price limit being used by the South Dakota Housing Development Authority as of the date the house is sold; OR 2. The monthly rental rate of all multifamily housing units in the district will be at or below the calculated rent for the state's eighty percent area median income as of the date the district is created, for a minimum of five years following the date of first occupancy. • Local – Any tax incremental districts that do not fall under Economic Development or Industrial All public school districts are funded through the State Aid to Education formula. The two primary channels of the formula are State Aid and Local Effort. Multiple agencies of the State of South Dakota calculate the amount of General Fund monies to be distributed to school districts each year through the State portion. Local effort is considered the amount of revenue that is generated by local property taxes at maximum levies. If a TIF is classified as Economic Development, Industrial, or Affordable Housing, the school funding that would be generated by the increment valuation is considered lost local effort and is paid through the State Aid side of the formula. If a TIF is classified as Local, the affected school district funding must be recouped through local effort in the form of an additional levy added to the General and Special Education Funds. In either scenario, the school district receives the financial need associated with the increment valuation. City of Spearfish TIF #7 will be classified as Affordable Housing; therefore, any lost local effort will be covered through the State Aid to Education Formula. Colliers Securities LLC Page 16  MAPS The Conditions map, SDCL § 11-9-16(1), is included as Attachment 2. The Improvements map, SDCL § 11-9-16(2), is included as Attachment 3. The Zoning Change Map, SDCL § 11-9-16(3), is included as Attachment 4. Colliers Securities LLC Page 17  SUPPLEMENTARY FINDINGS CHANGES TO CITY & COUNTY COMPREHENSIVE/MASTER PLAN MAP, BUILDING CODES & COUNTY ORDINANCES PER SDCL §11-9-16 (4) No changes to neither City ordinances nor the City Master Plan are required. LIST OF ESTIMATED NON-PROJECT COSTS The following is a list of the non-Project Costs per SDCL § 11-9-16(5). All costs are listed as taxable value; actual non-project costs will exceed the following amounts. Item Amount $20,000,000 Construction of Apartments TOTAL $20,000,000 STATEMENT OF DISPLACEMENT AND RELOCATION PLAN No residents or families will be displaced by the Project. SDCL § 11-9-16(6) PERFORMANCE BOND, SURETY BOND OR OTHER GUARANTY As security for its fulfillment of the agreement with the governing body, a purchaser or lessee of redevelopment property may furnish a performance bond, with such surety and in such form and amount as the governing body may approve or make such other guaranty as the governing body may deem necessary in the public interest. This additional security may be provided for in a Developer’s Agreement. Colliers Securities LLC Page 18  LIST OF SCHEDULES SCHEDULE 1 - Estimated Project Cost SCHEDULE 2 - Economic Feasibility Study & Estimated Captured Taxable Values SCHEDULE 3 - Economic Development Study SCHEDULE 4 - Fiscal Impact Statement Colliers Securities LLC Page 19  SCHEDULE 1 ESTIMATED PROJECT COSTS Estimates TID Eligible of Project Costs Requested The City of Spearfish has determined that this will be an affordable housing Tax Increment District, thus the eligible cost will be in the form of an infrastructure grant that will not exceed $4,941,090 This is a permitted use under SDCL 11-9-15. 11-9-15. Specific items included in project costs. Project costs include: (1) Capital costs, including the actual costs of the construction of public works or improvements, buildings, structures, and permanent fixtures; the demolition, alteration, remodeling, repair, or reconstruction of existing buildings, structures, and permanent fixtures; the acquisition of equipment; the clearing and grading of land; and the amount of interest payable on tax incremental bonds issued pursuant to this chapter until such time as positive tax increments to be received from the district, as estimated by the project plan, are sufficient to pay the principal of and interest on the tax incremental bonds when due; . (2) Financing costs, including all interest paid to holders of evidences of indebtedness issued to pay for project costs, any premium paid over the principal amount thereof because of the redemption of such obligations prior to maturity and a reserve for the payment of principal of and interest on such obligations in an amount determined by the governing body to be reasonably required for the marketability of such obligations; . (3) Real property assembly costs, including the actual cost of the acquisition by a municipality of real or personal property within a tax incremental district less any proceeds to be received by the municipality from the sale, lease, or other disposition of such property pursuant to a project plan; . (4) Professional service costs, including those costs incurred for architectural, planning, engineering, and legal advice and services; . (5) Imputed administrative costs, including reasonable charges for the time spent by municipal employees in connection with the implementation of a project plan; (6) Relocation costs; . (7) Organizational costs, including the costs of conducting environmental impact and other studies and the costs of informing the public of the creation of tax incremental districts and the implementation of project plans; and . (8) Payments and grants made, at the discretion of the governing body, which are found to be necessary or convenient to the creation of tax incremental districts, the implementation of project plans, or to stimulate and develop the general economic welfare and prosperity of the state. Colliers Securities LLC Page 20 The following shows the total project costs for the proposed Spearfish TIF #7: Colliers Securities LLC Page 21  SCHEDULE 2 ECONOMIC FEASIBILITY STUDY & TAXABLE VALUE The City has been asked to create a Tax Increment District to help offset the expansion associated with this project. This feasibility study provides that the Project Costs can be financed through tax increment financing under South Dakota Tax Incremental District Law (South Dakota Codified Laws Chapter 11-9). Tax increment financing is an indispensable self- financing tool used throughout the United States to help local governments successfully develop and redevelop areas and encourage economic development. In tax increment financing, the current real property tax assessed value of all properties in a designated project area (“tax increment financing district”) is established as the “base value.” As development in the tax increment financing district increases the assessed values of the redeveloped properties, a portion of the additional tax revenue generated by the increase in assessed value over the base value is set aside and committed by the City to the reimbursement of approved project costs. Tax increment financing is permitted only in connection with a “Project Plan” duly adopted by the City. The property is currently estimated to have a taxable value of $45,390. The improvements to be made to the property are estimated to add to the assessed valuation. The estimated increment resulting from the improvements would be approximately $4,941,090 in new value once fully developed. Since only positive tax increment will be applied, the proposed project is feasible. All of the project costs are found to be necessary and convenient to the creation of the Tax Incremental District and the implementation of the project. For purposes of this Project Plan, the Developer is projecting that the apartment complex will be built and fully developed by calendar year 2027. The City’s role is to simply act as a conduit for the revenue and pass on all positive increment to the Developer or to reimburse the City for their expenses, of which, will never exceed $4,941,090 in total payments, or 20 years, whichever comes first. It is assumed that all obligations incurred would be adequately secured as to allow the payment of principal and interest when due, whether by means of a taxable bond or loan. The actual repayment schedule may change, but all principal and interest shall be paid within the life of the TID. Utilizing the information regarding expected increment valuation and tax generation, it is possible to estimate an expected revenue stream that can be utilized to retire debt that will be created as a result of implementing the Project Plan. City of Spearfish TID #7 is proven feasible based upon the projections made by the Developer, projecting a total in excess of $4,941,090 in tax revenue during the life of the 20-year TID can be found in the following tables. For purposes of this Project Plan, it is anticipated no increment generated by City TID #7 will be available until the earliest of calendar year 2026 and thereafter. Colliers Securities LLC Page 22  TID Tax Revenue Estimates Available for City of Spearfish This project will have properties that are classified as Non-Ag Other. These projections are based on the developer’s build-out schedule. School County City Fire Water Ambulance Total Equalized 10.24 3.286 2.160 0 0 0 15.686 90% Project Increment Project Increment Project Increment Total Amount Available Construction Year Valuation Year Revenue Year Project Increment 4 1 2 3 for D/S 2023 2024 2025 $ - $ - $ - $ - $ - 2024 2025 2026 $ 141,174 $ - $ - $ - $ 141,174 2025 2026 2027 $ 141,174 $ 141,174 $ - $ - $ 282,348 2026 2027 2028 $ 141,174 $ 141,174 $ - $ - $ 282,348 2027 2028 2029 $ 141,174 $ 141,174 $ - $ - $ 282,348 2028 2029 2030 $ 141,174 $ 141,174 $ - $ - $ 282,348 2029 2030 2031 $ 141,174 $ 141,174 $ - $ - $ 282,348 2030 2031 2032 $ 141,174 $ 141,174 $ - $ - $ 282,348 2031 2032 2033 $ 141,174 $ 141,174 $ - $ - $ 282,348 2032 2033 2034 $ 141,174 $ 141,174 $ - $ - $ 282,348 2033 2034 2035 $ 141,174 $ 141,174 $ - $ - $ 282,348 2034 2035 2036 $ 141,174 $ 141,174 $ - $ - $ 282,348 2035 2036 2037 $ 141,174 $ 141,174 $ - $ - $ 282,348 2036 2037 2038 $ 141,174 $ 141,174 $ - $ - $ 282,348 2037 2038 2039 $ 141,174 $ 141,174 $ - $ - $ 282,348 2038 2039 2040 $ 141,174 $ 141,174 $ - $ - $ 282,348 2039 2040 2041 $ 141,174 $ 141,174 $ - $ - $ 282,348 2040 2041 2042 $ 141,174 $ 141,174 $ - $ - $ 282,348 2041 2042 2043 $ 141,174 $ 141,174 $ - $ - $ 282,348 $ 2,541,132 $ 2,399,958 $ - $ - $ 4,941,090 Multifamily Phase 1 $ 10,000,000 Projected Valuation Year % Assessed Projected Valuation Taxable Valuation Taxation 2023 0% $ - $ - $ - 2024 0% $ - $ - $ - 2025 0% $ - $ - $ - 2026 100% $ 10,000,000 $ 9,000,000 $ 141,174 2027 100% $ 10,000,000 $ 9,000,000 $ 141,174 2028 100% $ 10,000,000 $ 9,000,000 $ 141,174 Multifamily Phase 2 $ 10,000,000 Projected Valuation Year % Assessed Projected Valuation Taxable Valuation Taxation 2023 0% $ - $ - $ - 2024 0% $ - $ - $ - 2025 0% $ - $ - $ - 2026 0% $ - $ - $ - 2027 100% $ 10,000,000 $ 9,000,000 $ 141,174 2028 100% $ 10,000,000 $ 9,000,000 $ 141,174 The TIF can not exceed 20 years from the year of creation Actual Revenue is for 18 years For projection purposes only and do not reflect actual revenue Colliers Securities LLC Page 23  SCHEDULE 3 ECONOMIC DEVELOPMENT STUDY Introduction City of Spearfish has been approached concerning the creation of a tax increment district (TID). Per South Dakota Codified Law 11-9-8, the governing body must make a finding that not less than 50%, by area, of the real property within the district will stimulate and develop the general economic welfare and prosperity of the State through the promotion and advancement of industrial, commercial, manufacturing, agricultural and natural resources, and the improvement of the area is likely to enhance significantly the value of substantially all of the other real property in the district. Study Area Boundary The Project boundaries are described and depicted on the maps in Attachments 1 and 2 of this Plan. Establishing Economic Development South Dakota law describes affordable housing as activity that stimulates and develops the general economic welfare and prosperity of the state through the promotion and advancement of industrial, commercial, manufacturing, agricultural, or natural resources. The definition of Affordable Housing for State Aid to Education Formula purpose is any area where the original selling price of any house in the district will be at or below the first-time homebuyer purchase price limit being used by the South Dakota Housing Development Authority as of the date the house is sold; OR the monthly rental rate of all multifamily housing units in the district will be at or below the calculated rent for the state's eighty percent area median income as of the date the district is created, for a minimum of five years following the date of first occupancy. The proposed City of Spearfish TID #7 meets both of these criteria. Finding That the Improvements to the Area Are Likely To Enhance Significantly the Value Of Substantially All Of The Other Real Property In The District It is definitively found that once the improvements set forth within the Project Plan are initiated, the improvements will enhance significantly the value of substantially all of the other real property in the district. The City of Spearfish TID #7 will provide much needed affordable housing to the growing City of Spearfish region. A supplemental use of the TIF will be improvements as deemed necessary within the developed area. Conditions Within The Study Area; Land Use And Planning Land Use, Planning And Comprehensive Plan The City of Spearfish Comprehensive Plan is consistent with the proposed use of the District. Colliers Securities LLC Page 24 Findings within the Project Area Analysis It is found that not less than 50%, by area, of the real property within the District will stimulate and develop the general economic welfare and prosperity of the State of South Dakota through the promotion and advancement of available affordable housing. It is also found that the improvement of the area is likely to enhance significantly the value of substantially all of the other real property in the District in accordance with SDCL 11-9-8. The investment in the Project area will stimulate and develop the general economic welfare and prosperity of the region through the promotion of affordable housing. The Project area is a tract of land in the City of Spearfish. It is to be used for an expansion of affordable housing, the necessary infrastructure, improvements to the water and sewer service. The Developer will offer an apartment complex consisting of two apartment buildings. Each building will have up to 105 units each. Colliers Securities LLC Page 25  SCHEDULE 4 FISCAL IMPACT STATEMENT FOR CITY OF SPEARFISH TID #7 Introduction A fiscal impact statement shows the impact of the TID, both until and after the bonds or obligations are repaid, upon all entities levying taxes upon property in the District. The following fiscal impact statement is intended to provide only a brief analysis of the estimated impact of the Tax Increment District to the public pursuant to SDCL § 11-9-13(4). It is not intended to challenge a more detailed, complete financial analysis. Definitions “Assumptions” means factors or definitions used in the fiscal analysis. Assumptions may include facts and figures identified by the District and educated guesses that are sometimes necessary when not all of the information is available. Assumptions are often used to extrapolate an estimate. Assumptions may include an estimate of tax levies of each taxing entity, the school aid formula contribution, the value of the real property, etc. "Base Revenues” means the taxes collected on the base value. “Fiscal Impact” means the increase or decrease in revenues and generally refers to an impact to revenues caused by the district. “Revenue” means ad valorem taxes. “Tax Increment District” means City of Spearfish Tax Increment District Number 7 “Taxing Districts” means all political subdivisions of the state which have ad valorem taxing power over property within the boundaries of the Tax Increment District. “Tax Increment Revenues" means all revenues above the Base Revenues. Assumptions 1. The property will have improvements which at completion is estimated at taxable purposes at $20,000,000 2. The average tax levy of all taxing districts will be $15.686 per thousand dollars of taxable valuation. 3. Tax increment will start to be collected in 2026 and end prior to 2043. 4. The discretionary formula will be waived by Developer. Colliers Securities LLC Page 26  SCHEDULE 5 ESTIMATED CAPTURED TAXABLE VALUES For purposes of this Project Plan, it is assumed that the Developer will elect not to use the real property tax discretionary formula currently utilized in the City of Spearfish, South Dakota, pertaining to payment of real property taxes (i.e., 20% Year 1; 40% Year 2; 60% Year 3; 80% Year 4; and 100% Year 5.) * Actual valuation shall depend upon the value determined by the Lawrence County Director of Equalization when assessed, with the application of dollars-per-thousand from local taxes. All tax increment revenues shall be from Generally Applicable Taxes attributable to the improvements to be constructed in the TID. The potential for total increment collections are estimated to be at the maximum range of $4,941,090 covering a span of captured tax years not to exceed 20. Collection is anticipated to begin in 2026, and the schedule carries out the tax captured 20 years from the date of Plan adoption. The following dollars-per-thousand rates are the current taxing rates of the local taxing jurisdictions for Owner Occupied property types: 2023 Property Tax Rate Entity "Other" City of Spearfish 2.160 Lawrence County 3.286 Spearfish School District 10.240 Total 15.686 Utilizing the information regarding expected increment valuation and tax generation, it is possible to generate an expected revenue stream that can be utilized to retire debt that will be created as a result of implementing the Project Plan. Colliers Securities LLC Page 27  LIST OF ATTACHMENTS Attachment 1 - Descriptions of Real Property Attachment 2 - Conditions map, SDCL § 11-9-16(1) Attachment 3 - Improvements map, SDCL § 11-9-16(2) Attachment 4 - Zoning Change Map SDCL § 11-9-16(3) Attachment 5 – Tax Increment District Boundary Attachment 6 – Department of Revenue Classification Letter Colliers Securities LLC Page 28  ATTACHMENT 1 DESCRIPTIONS OF REAL PROPERTY: • LOT 1 AND LOT 2 OF THE NE1/4NE1/4 OF SECTION 16, T6N, R2E, BHM, SPEARFISH, LAWRENCE COUNTY, SOUTH DAKOTA AND AND INCLUDING THE HILL STREET RIGHT-OF-WAY IMMEDIATELY ADJACENT TO THE ABOVE DESCRIBED LOCATION, HILL STREET RIGHT-OF-WAY ADJACENT TO LOT 1 AND LOT 2 BLOCK 1 OF THOMSON ADDITION, ALL LOCATED IN SECTION 16, T6N, R2E, BHM, SPEARFISH, LAWRENCE COUNTY, SOUTH DAKOTA. (TO BE KNOWN AS LOT 3 AND LOT 4 OF BLOCK 1 OF THOMSON ADDITION) All Located in the City of Spearfish, Lawrence County, South Dakota including within and adjacent rights-of-ways. Colliers Securities LLC Page 29  ATTACHMENT 2 Conditions picture for City of Spearfish Tax Incremental District #7, SDCL § 11-9-16(1) The following are pictures showing the current conditions of the proposed location of TIF #7 Colliers Securities LLC Page 30  ATTACHMENT 3 Improvements map for City of Spearfish Tax Incremental District #7, SDCL § 11-9-16(2). The following is a plat map of the Tax Increment District: Colliers Securities LLC Page 31 Shown below is the Plat Map for the City of Spearfish TID #7: Colliers Securities LLC Page 32  ATTACHMENT 4 Zoning Map for City of Spearfish Tax Incremental District #7 SDCL § 11-9-16(2). Colliers Securities LLC Page 33  ATTACHMENT 5 The following shows the Boundary Map for the City of Spearfish TIF #7: Colliers Securities LLC Page 34  ATTACHMENT 6 The Following shows the Department of Revenue Classification Letter: Colliers Securities LLC Page 35