The developers of Presidents Plaza have secured financial backing from U.S. Bank for the $45.5 million mixed-use downtown development planned for Sixth and St. Joseph streets.
Hani Shafai and Pat Hall, the partners in Presidents Plaza LLC, shared a letter of intent from the bank with the Legal & Finance Committee on Wednesday. The city had given the development team until the end of January to provide proof of private financing for the project.
"It's going great," Shafai said. "We're spending a lot of money on layout and design. The interest has been very good."
"We're going to meet the construction deadlines," Hall said.
According to the Jan. 20 letter, U.S. Bank has provided the developers with confidential documents about three pieces of financing -- the tax-increment financing loan, New Market Tax Credit leverage loan and traditional commercial real estate financing. The letter is signed by Douglas K. Jackson, vice president of commercial banking in Rapid City.
"U.S. Bank will continue to work with Presidents Plaza LLC toward the goal to bring this long anticipated project to downtown Rapid City," Jackson wrote.
The exact details of the financial arrangement, including the conditions that need to be met and the amount of each loan, were not made public. The leverage loan is described as "traditional commercial real estate bank financing relating to portions of the project that qualify for new market tax credits." Residential condominiums do not qualify for the credits and would be covered under the traditional real estate financing component, according to the letter.
The city has also committed $2.8 million in Vision Fund dollars toward the public-private development. The TIF will back another $11.7 million in public improvements, including parking garage construction, power line burial and soil removal on the city-owned property.
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As proposed, Presidents Plaza would include a mix of retail, office and residential space, along with a hotel and convention center and 575 to 600 parking stalls for tenants and the public.
Shafai said they are still working out the final details on the new market tax credits, an important piece of the financing for the project.
The credits, which come from the U.S. Department of Treasury, are meant to encourage investment in low-income, rural or distressed communities. Investors receive a tax credit against their federal income tax returns that equals 39 percent of their total investment amount over a period of seven years, according to the department's Community Development Financial Institutions Fund.
"We're very optimistic," Shafai said.
Presidents Plaza has until May 7 to get the public TIF improvements under contract for construction or the project will lose all $11.7 million in tax-increment financing from the city, according to state law.
Contact Emilie Rusch at 394-8453 or firstname.lastname@example.org.