02-14-1996 Council Agenda - Laserfiche WebLink

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02 -09 -1996 10:48 612 339 5897 BE5T&FLANAQAN P.07 ( "HUD") (the "20/50 Test"). Under current applicable limits, 50% of such median for a family of four is $25,500, for a family of three: $22,950, for a family of two: $20,400 and for one person: $17,850. See "RENTAL HOUSING REQUIREMENTS; LOW INCOME REQUIREMENTS" and "TAX CREDITS" herein. Continuing compliance with the 20/50 Test is necessary to maintain the tax - exempt status of interest on the Bonds. The tenant income limits described above place a practical limit on the maximum available revenues of the Project available from such units and may reduce, by an undeterminable amount, the value of the Project. The Project is also intended to qualify for low-income housing tax credits under Section 42 of the Code. In order to obtain such low - income housing tax credits, Section 42 of the Code requires that either (i) 20% of the units in the Project be set aside for tenants with incomes of 50% or leas of area median income, adjusted for family size, or (ii) 40% of the units be set aside for tenants with incomes below 60% of such median income. Section 42 also requires that the gross rent for such units cannot exceed 30% of the applicable income ceiling. See 'TAX CREDITS - Low Income Rent Requirement" herein. The Partnership expects to operate the Project with 20% of the units set aside for occupancy by persons and families whose incomes do not exceed 5035 of area median income, adjusted for family size, in order to qualify 2035 of Project for Tax Credits under Section 42 of the Code. Repair and Replacement Fund. Beginning on February 15, 1997, and on the fifteenth day of each month thereafter for so long as the Bonds remain outstanding, the Partnership shall pay to the Trustee $1,967 per month for deposit into a Repair and Replacement Fund maintained by the Trustee. Such amounts may be disbursed by the Trustee to the Partnership solely for capital expenditures necessary for the Project. Upon an Event of Default and acceleration of the Bonds, amounts in the Repair and Replacement Fund may be used by the Trustee to pay debt service on the Bonds. Hnanclal Forecast No assurances can be given that Project occupancy, rent or expense levels will be adequate in the future to enable the Partnership to make payments under the Loan Agreement sufficient to pay debt service on the Bonds. The Partnership obligation to make such payments is a nonrecourse obligation of the Partnership. The Partnership has provided an examined forecast for the Project through the year 2001 which has been prepared by David H. Healey, Ltd., Certified Public Accountant, and is included in Appendix B hereto. Such examined forecast is based on certain assumptions made by the Partnership. Neither the assumptions nor the cash flow forecast have been independently verified by the City or by the Underwriter and neither the City nor the Underwriter accepts any responsibility therefore. ACTUAL PROJECT REVENUES AND EXPENSES WILL VARY, OFTEN MATERIALLY, FROM SUCH FORECAST. -16- Page 18