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