Problem 3 [15 points] Tax Incremental Financing

Assume that the municipality is interested in providing the Tax Incremental Financing by issuing the municipal bonds with annual payments and an interest rate of 2%. You are considering an affordable housing development on the vacant land in the Village of Cambridge. The site is located within the Tax Incremental District, established 20 years ago. However, the remaining life of this Tax Incremental District is 15 years. The current mills rate in the Village of Cambridge is $21.36. The current land value is $60,000, which is your base assessed property value for base property taxes. According to your Front Door Model calculations, the property value after development is $2,100,000. What is the maximum Tax Incremental Financing that you can potentially be eligible for? Be sure to calculate

1. [3 points] the TIF mortgage constant, 2. [3 points] the current taxes, 3. [3 points] the future taxes after the development, 4. [3 points] the tax increment (TI), and 5. [3 points] the maximum Tax Increment Financing (TIF).