06/12/1995 Council Packet - Laserfiche WebLink

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COUNCIL WORK SESSION MAY 3, 1995 that Council Member Bergeson's question needed to be answered. He noted that the City Council has worked on this project in extremely good faith, however, the City must deal with what is here today and let the market place determine what the rents should be. Mayor Reinert said he personally felt that the City should not offer any more permit concessions for the project. Mr. Saxton said that his company has also worked diligently on this project and has not missed any time limits on any portion of the project. However, he felt that his company was caught up is a political situation when the application for tax credits was submitted. Mr. Saxton said that there is no question that the project will be done, the only question is the amount of rent on each. Mr. Schmidt asked if this means that there will TIF on the 10 family single family units as well as the 47 cottage units? Mr. Schumacher said that the TIF district is in place, the only questions are what percent will be included in the development agreement and should the 10 single family units be included in the TIF subsidy. Mr. Saxton explained that HUD sets the limit of the rents. He is planning to increase the rents by 3% each year because it is expected that costs such as taxes will increase by that percentage. However, rents can never be raised above the HUD cap. Mr. Saxton said that he will try to make sure that Lino Lakes residents get the first opportunity to rent the units as they become available. However, he could not guarantee that this will happen. Mr. Saxton explained that HUD only requires that these units be dedicated as senior housing for 15 years. He said that the deed restrictions will include language guaranteeing that this project will be senior housing for at least 30 years. Mr. Saxton asked what would happen to the project if Cottage Homesteads of America, Inc. went bankrupt. He explained that NSP will own 99% of the project and the general partners will own 1%. Mr. Schumacher asked what guarantee is there that you will continue as owners of the project. He noted a project in another City where the owners had problems and ownership changed about half of the way through the project. Mr. Derrick said that there is no guarantee that they will continue their ownership. He noted that the City will have control of the project through the development agreement. Mr. Schmidt and Mr. Saxton gave brief explanations regarding their involvement in other projects and PAGE 5