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MINUTES <br />CITY COUNCIL <br />APRIL 16, 1997 <br />Ippel reported that the OS contained no developer fee. The Minnesota <br />Housing Financing Agency allows a developer fee. Ippel indicated that <br />the OS indicated that $628,628 in rehab would be done with that amount <br />to be reimbursed from the sale of the tax - exempt bonds. Ippel indicated <br />that Dominium is proposing to reimburse themselves a developer fee with <br />the additional tax credits. Ippel stated that a developer fee is a customary <br />part of a deal such as this. <br />Urness agreed that Dominium could have paid itself a developer fee as <br />part of the tax - exempt financing. Dominium could also have borrowed <br />less money under the tax - exempt financing and done only the $383,000 in <br />rehab work that was required as a minimum. <br />Ippel stated that there is nothing wrong in Dominium taking a developer <br />fee, and they have indicated a fee of $406,544 in their application. <br />Urness pointed out that Dominium is borrowing this fee, and there are <br />guidelines on how much of a fee can be taken. <br />Morelan stated that the improvements which were made at The Provinces <br />were financed through the sale of the tax- exempt bonds and with <br />partnership equity. Morelan also pointed out that the bond issue will cash <br />flow without any additional tax credits. The additional credits will recoup <br />a developer fee and perhaps provide for additional rehab work. <br />Urness again pointed out that Dominium could have borrowed less money. <br />Dominium is responsible for repaying the bonds. <br />Brachman indicated that as of today, Dominium has gotten no money from <br />this deal. Brachman also pointed out that at a 65% tax credit level there <br />will be no additional rehab work done at The Provinces. <br />Ippel indicated that without the tax credits, there will be no developer fee. <br />Morelan felt that Dominium made a huge assumption that the City would <br />increase tax credits over the 40% level. <br />Fahey felt the additional credits were a reasonable assumption given that <br />the existing tenant mix was 65% of residents at 60% of median income <br />levels. <br />Ippei agreed that Dominium put in approximately $250,000 more rehab <br />work than what was required. <br />Page 114 <br />