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ce+ 6/ 2204 cecrytaea, <br />515 Little Canada Road, Little Canada, MN 55117 -1600 <br />(612) 484 -2177 / FAX: (612) 484 -4538 <br />MEMORANDUM <br />TO: Mayor Fahey & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: November 7, 1997 <br />RE: Tax Exempt Financing for Acquisition of Montreal Courts by Housing <br />Alternatives Development Corporation (HADC) <br />MAYOR <br />Michael I. Fahey <br />COUNCIL <br />Beverly Scalze <br />Jim LaValle <br />Steve Morelan <br />Bob Pedersen <br />ADMINISTRATOR <br />Joel R. Hanson <br />Mr. Jim Echtenkamp of Goldmark Investment Company will be present at Wednesday's meeting <br />to discuss the issuance of approximately $20,000,000 in tax exempt financing relative to the <br />acquisition of Montreal Courts by HADC. (Goldmark will be the property manager.) They will <br />be seeking an inducement resolution for the issuance of these bonds and would like us to call a <br />public hearing for November 26, 1997 to consider the adoption of the final resolution regarding <br />bond issuance. Here are some of the key issues for your consideration: <br />♦ $20,000,000 bond issue will include $1,100,000 in immediate improvements to the <br />complex. (See listing in attached materials prepared by Goldmark.) <br />• In addition to the previously mentioned capital upgrades, $620,000 will be spent on fire <br />suppression improvements including complete sprinklering of all buildings as part of <br />their initial upgrade. <br />♦ $450,000 will be put aside in a capital reserve to address future improvements to the <br />property. An additional $66,000 to $88,000 per year will be added to this amount over <br />the term of the bonds. <br />• To assist in the installation of the sprinkler system, they are asking that we waive our 1% <br />bond issuance fee ($200,000). <br />♦ This is not a tax credit project in that the owners are a non - profit corporation. (A non- <br />profit corporation is not able to take advantage of tax credits as they are not subjected to <br />income taxes.) This property will still require 40% of the residents meet 60% of median <br />income to make it eligible for this financing. As you may know, this property will have <br />no difficulty meeting that criteria. <br />♦ The purchase agreement expires in mid - January. Therefore, closing needs to occur as <br />soon as possible. <br />Page 5 <br />