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MINUTES <br />CITY COUNCIL <br />APRIL 16, 1997 <br />Morelan felt thaC whatever level of tax credits the CiCy approves, <br />Dominium will need to have a hi~her percentage of residents meeting low <br />to moderate-income levels. Urness indicated that there is a big <br />disincentive to turn tenants away even if they make more than 60% of <br />median income. This is because if a unit is vacant for a couple of months <br />the loss of rent for thaY time period will likely eat away the tax credit. <br />Brachmin also informed the Council that the financing for The Provinces <br />required that they put a ceitain dollar amount away per unit each month <br />into a replacement reserve. Urness reported that as part of the rehab any <br />appliance older than three years was replaced. As apartments change <br />over, the replacement reserve will be used to do additional replacements. <br />Brachman indicated that every year lpproximately 50% of residents <br />chan~e. AC the time a unit changes over, additional rehab is done. <br />I3rachman reported that they are asl<ing for a minimum of 65% tax credits. <br />This level will not change the existing resident mix. If the City is willing <br />to lpprove a higher level, additional improvements can be made to the <br />complex <br />Fahey stated that he favored the 65% level. He did not believe the <br />percenta~e should be increased from the (evel which currently exists. <br />Fahey suggested that if this issue had been discussed when Dominium first <br />sought approval for the tax-exempt financin~, he may have pushed for a <br />fire suppression system. Fahey stated that he suppoited the increase from <br />40% Co 65% tax credits since this increase results in improvements to the <br />complex. However, he was not in favor of increasina the level over what <br />currently exists. <br />Mary Ippel repoi~ted th~t Dominium is required to put approximately $200 <br />per unit, or $23,612 per year, into a replacement fund. Ippel also repoi~ted <br />that the Operating Statement certifies that $628,628 in rehab will be done <br />at The Provinces. <br />The City AdministraYor pointed out Yhat the Official Statement was based <br />on 40% tax credits. The Administrator asked why additional tax credits <br />are needed to repay the cost of the rehab when that cost had already been <br />factored into debt service aC a tax credit level of 40%. The Administrator <br />pointed out the uses ofthe fund in the O.S. included $612,000 in rehab <br />costs. Additional tax credits are new money into the deal. <br />Urness pointed out that under the tax-exempt financing, Dominium is <br />required to do $383,000 in rehab. Dominium decided to do more <br />ai~ticipating there would be additional tax credits to offset the cost. <br />4 <br />