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146 <br />SPECIAL COUNCIL MEETING MARCH 30, 1994 <br />started with the current HUD rent maximum and reduced the rents <br />by applying credits from the City and applying TIF credits. This <br />established the proposed rent which is $276.00 below the HUD <br />maximum. He noted that the average senior rent in nearby <br />municipalities is $671.00. Mr. Derrick further explained that a <br />market study was done for this area and meetings were held with <br />prospective renters. It was determined that incomes were lower <br />in Lino Lakes and this area could not support the HUD rent. Mr. <br />Derrick met with Mr. Schumacher and discussed such matters as <br />does the City have a lender they regularly work with who would be <br />willing to provide a mortgage at a lower rate. He then started <br />working with First Banks who needed to reinvest some of their <br />proceeds back into the communities it serves and talked with NSP. <br />The current situation is that NSP is buying the tax credits at <br />below market rate and they will also build the garages as an <br />extra subsidy. Mr. Derrick suggested that the City could further <br />reduce the rents by agreeing to waive all fees and defer them at <br />no interest. This could generate another $20,000.00 per year to <br />subtract from the rents. Mr. Derrick talked to Mayor Reinert <br />about this proposal. Mayor Reinert was not enthused about this <br />proposal and said that the City would have to compare fees from <br />the two (2) development proposals. Mr. Derrick explained that <br />First Banks is impressed because the City is willing to help <br />"write down" the rents by waiving some fees. First Banks feels <br />this will help keep the units rented. <br />Mayor Reinert explained to Council Member Kuether that this <br />information was presented to the City Council at the March 9, <br />1994 work session. <br />Council Member Kuether noted that the rents had been projected to <br />be at $399.00 with state grants. She asked if the rents will go <br />down further if the City waives some of the fees. Mr. Derrick <br />said no, there will be no state grants. <br />Mr. Derrick explained that he could not guarantee that the rents <br />would remainat the $399.00 per month figure. First Banks is <br />requiring that the 1.2 debt service ratio be protected. Although <br />the interest will be at a fixed rate for 20 years, other banking <br />factors will affect the rent. <br />Council Member Kuether asked how much money is Cottage Homesteads <br />putting into the development. Mr. Saxton explained approximately <br />$979,588.00. Council Member Kuether asked why Cottage Homes is <br />doing a project like this. Mr. Saxton explained that several <br />years ago he realized that his mother had wanted to sell her home <br />because it was becoming difficult for her to maintain. When she <br />started to look for alternative housing, the only thing available <br />was high rise senior housing not located in her community or a <br />PAGE 3 <br />1 <br />1 <br />1 <br />