04-23-1997 Council Agenda - Laserfiche WebLink

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MINUTES CITY COUNCIL APRIL 16, 1997 Morelan felt that whatever level of tax credits the City approves, Dominium will need to have a higher percentage of residents meeting low to moderate - income levels. Urness indicated that there is a big disincentive to turn tenants away even if they make more than 60% of median income. This is because if a unit is vacant for a couple of months the loss of rent for that time period will likely eat away the tax credit. Brachman also informed the Council that the financing for The Provinces required that they put a certain dollar amount away per unit each month into a replacement reserve. Urness reported that as part of the rehab any appliance older than three years was replaced. As apartments change over, the replacement reserve will be used to do additional replacements. Brachman indicated that every year approximately 50% of residents change. At the time a unit changes over, additional rehab is done. Brachman reported that they are asking for a minimum of 65% tax credits. This level will not change the existing resident mix. If the City is willing to approve a higher level, additional improvements can be made to the complex Fahey stated that he favored the 65% level. He did not believe the percentage should be increased from the level which currently exists. Fahey suggested that if this issue had been discussed when Dominium first sought approval for the tax - exempt financing, he may have pushed for a fire suppression system. Fahey stated that he supported the increase from 40% to 65% tax credits since this increase results in improvements to the complex. However, he was not in favor of increasing the level over what currently exists. Mary Ippel reported that Dominium is required to put approximately $200 per unit, or $23,612 per year, into a replacement fund. Ippel also reported that the Operating Statement certifies that $628,628 in rehab will be done at The Provinces. The City Administrator pointed out that the Official Statement was based on 40% tax credits. The Administrator asked why additional tax credits are needed to repay the cost of the rehab when that cost had already been factored into debt service at a tax credit level of 40 %. The Administrator pointed out the uses of the fund in the O.S. included $612,000 in rehab costs. Additional tax credits are new money into the deal. Urness pointed out that under the tax- exempt financing, Dominium is required to do $383,000 in rehab. Dominium decided to do more anticipating there would be additional tax credits to offset the cost. Page 113