01-28-1998 Council Agenda - Laserfiche WebLink

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f. Subject to the restrictions of Section 42 of the Code with regard to the set -aside units, the Partnership will maintain rents at an appropriate market rate. Appropriate is defined as a level which approximates market rents for similar units in the area. The Partnership shall not allow rents to become unduly low so as to restrict cash flow for ongoing Project maintenance thereby leading to a decline in the quality of the tenants the Project can attract. 3. Rehabilitation. The Partnership hereby certifies that all work listed the Scope of Work, attached hereto as Exhibit "A" has been completed in its entirety. 4. 42(m) Determination. Contemporaneously with the execution of this Agreement, the City will issue the 42(m) Determination based upon final financial information received by the City as required by the Code, subject to the limitation on Credits as provided for in this Agreement. Such 42(m) Determination shall specifically provide that the city has determined that the amount of low- income housing tax credit to be generated by renting 65% of the Project units to individuals or families whose income is 60% or less of the area median gross income (including adjustments for family size) as determined in accordance with Section 42 of the Code will not exceed the amount necessary to ensure the financial feasibility of the Project and its viability as a qualified affordable housing project. 5. Escrow /Deposits and Withdrawals from Escrow. The City and the Partnership shall create an escrow ( "Escrow ") with an escrow agent, under terms and with an escrow agent acceptable to the City and the Partnership. Creation of the Escrow shall occur approximately 30 days before the first deposit is made by the Partnership as subsequently defined. Upon creation of the Escrow, the City shall make a one -time deposit of $38,850 (City Deposit). By July 151 of the year the Project qualifies under the 4(d) class rate (or any such class rate thereafter established by the State of Minnesota that is lower than the 4(c) class rates for real estate taxes payable in 1997 (hereinafter 97 4(c)), the Partnership shall deposit the difference between the real estate taxes for the Project that would be due based upon current estimated market values applied against the 97 4(c) rates applicable to land and buildings (3.40% and 2.30% respectively) and the actual real estate taxes for the project for the year in question (Partnership Deposits). Deposits shall continue until such time as the Escrow holds sufficient funds to provide for the installation of a sprinkler system in the Project's buildings that are appropriate for existing structures as determined by the City. Escrow fund shall then be released to pay for the costs and expenses incurred or to be incurred relative to installation of the sprinkler system. When all costs are paid, Partnership shall not be required to make any further Partnership Deposits and all funds remaining in the Escrow shall revert to the Partnership. If the 4(d) class rate (or other such lower class rate subsequently enacted by the legislature) is eliminated and funds in the Escrow are insufficient to pay for the installation of the sprinkler system in the buildings, the Escrow shall be terminated and the City Deposit plus accrued interest shall be returned to the City. Remaining funds shall be returned to the Partnership. 6. Annual Payment. Beginning in the year in which the Project qualifies and is obligated to pay real estate taxes at the 4(d) class rate (taxes payable in 1999), the Partnership shall pay the City an annual fee equal to the actual difference in the City's portion of real estate taxes for Page 81