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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: December 12, 1997 <br />RE: Provinces Tax Credit Agreement <br />MAYOR <br />Michael I. Fahey <br />COUNCIL <br />Beverly Scalze <br />Jim LaVaile <br />Steve Morelan <br />Bob Pedersen <br />ADMINISTRATOR <br />Joel R Hanson <br />On April 23, 1997, the Council approved tax credits at a 65% level for the Provinces project <br />subject to Dominium complying with certain terms and conditions outlined in their letter of April <br />21. Since that date, we have been requesting an agreement to document this transaction that will <br />be recorded against the property. Attached to this memo is the correspondence indicating the <br />progress made to -date. You will note that Todd Urness ( Dominium's attorney) drafted a <br />proposal which is rather vague. Mary Ippel and I then proposed some modifications that are also <br />attached for your review. <br />I would call your attention to Provision #5 which attempts to specify the management issues that <br />were raised in the Council workshops. We have also inserted language whereby the partnership <br />will not seek qualification of the project under the 4(d) class rate. Obviously, this was not <br />discussed at the time of our deliberations as it was not yet enacted by the legislature. Due to the <br />fact tax credit units meet the criteria to qualify for this lower class rate, unexpected cash flow <br />will be generated. This cash flow could raise the ability to sprinkle the property. If not, perhaps <br />we can prevent our tax base from eroding. It should also be noted that the 4(d) class rate requires <br />a suppressed rent level which I recall as being in conflict with Dominium's goal of keeping rents <br />as high as the market will allow. <br />We had hope to have the proposed final agreement available for Wednesday's meeting. The <br />reason I am putting it through at this point is to have this matter addressed before the end of the <br />year and because Dominium will need a revised 42(m) letter from us in the next few weeks. <br />Should you have any comments or questions on these documents in the meantime, please let me <br />know. <br />JRH:kpv <br />Page 54 <br />