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APR. 24. 2002 12 :51PM EHLERS & ASSOCIATES NO. 9137 P. 2 E H LE MEMORANDUM & ASSeCIATES RS INC DATE: April 23, 2002 TO: Joel Hanson, City of Little Canada FROM: Mark Ruff RE; Common Bond Project You have asked us to comment on the potential for the City to assist Common Bond with the remodeling of its existing facility in conjunction with the construction of 35 new units of housing. The remodeling costs could range from $100,000 to $200,000. The City could create a new housing tax increment financing district with a maximum term of 26 years and assist Common Bond with up -front dollars to complete the remodeling as long as the following conditions were met: I. The new units and the existing building both met the income restrictions for a housing district, which are that at least 20% of the units be limited to incomes of 50% or less of median or 40% of the units are income restricted to 60% of median income. 2. The developer demonstrates the need for the assistance through a project pro forma. 3. The City is comtortable that the project as a whole would not occur without the assistance. Most attorneys are not concerned with meeting traditional "qualified costs" such as land acquisition, site improvements, etc. with a housing district, given recent changes in legislation. The schedule, assuming. no waivers of any deadlines were requested, could enable a district to be established by June 26 ". Attached is a sample schedule. We would further recommend that this district include, either how or at a later modification, the Sherman development to maximize use of increment and reduce administrative costs. Also attached is a projection which shows a very low tax estimate for the 35 units of only $460 per unit and demonstrates that $125,000 could be repaid to the City, with 6% interest, over 15 years. We would expect that the taxes would be higher than these estimates, but current tax treatment of affordable housing is still in flux given property tax reform. Please contact us with any further comments or questions. - 1 7 -